Venture Capitalists Face Another Sexual Harassment Suit

Another lawsuit is raising the issue of sexual discrimination in Silicon Valley. Three female employees have sued CMEA Capital, a venture capital firm based in San Francisco, claiming sexual harassment and retaliation.

In the case against CMEA, in Superior Court of California in San Francisco, three CMEA female administrative assistants say that John Haag, the former president and chief operating partner, “behaved in sexually and racially inappropriate ways” and that after they formally logging their complaint with CMEA in April, “management did not take reasonable steps to protect female and minority employees from Defendant Haag’s severe and pervasive harassment, and have perpetuated the problem since his departure.”

Mr. Haag has denied these claims. “John Haag looks forward to the truth coming out in the course of this lawsuit,” Marcie S. Isom of the law firm Gordon & Rees, Mr. Haag’s lawyer,  said in a statement. “Mr. Haa plans to vigorously defend himself and trusts the justice system will completely vindicate him. Because this matter is in active litigation, Mr. Haag cannot offer further comment.”

The 17-page complaint against CMEA, filed in February, contains several lurid claims. Among them: that Mr. Haag referred to one plaintiff as “dirty bird,” watched pornography at the office, and inquired about whether a plaintiff  “groomed her pubic hair.”

The three plaintiffs, Dawn-Shemain Weeks, Margaret Hines and Shannon Schlagenhauf, said that other partners at CMEA were aware of the inappropriate behavior and that at one point CMEA’s founder, Tom Baruch, called Mr. Haag a “predator” and warned the plaintiffs to stay away from him.

The plaintiffs filed a formal complaint with CMEA’s management in April. They say that a subsequent investigation by Tri-Net, an independent human resources firm, corroborated their accounts and that as a result CMEA bought out Mr. Haag’s interests in C! MEA funds and dismissed him.

After the buyout, the plaintiffs say, the firm retaliated against them by cutting their overtime pay â€" which, they say, made up more than a quarter of their salary- and increasing their workload. According to the suit, they say one partner complained that their complaint had cost CMEA “a lot of money.”

CMEA denies those claims. The firm has hired Lara Villarreal Hutner of Villarreal Hutner & Todd as its lead trial counsel. In a prepared statement, Ms. Villarreal Hutner said:

“The truth is that this lawsuit is the result of the least ‘sexy’ of its allegations: these administrative assistants’ curtailment of overtime resulting from CMEA’s commitment to excellence and efficiency. CMEA acted at all times professionally and with integrity, underscored by the fact that for the last 8 months the administrative assistants continued working for the firm, and resigned only after retaining an attorney and filing this lawsuit. While the statemets asserted in this lawsuit are salacious, CMEA is confident that the true facts supported by evidence - not others’ self-interested mudslinging - will determine the outcome of this case. As such, CMEA is fully prepared to vigorously defend itself and its reputation, and is supremely confident in its ability to prevail.”

One plaintiff, Ms. Weeks, resigned from CMEA in January, saying she was “not comfortable working in a work environment that continues to condone inappropriate sexual conduct and retaliation.” The two remaining plaintiffs, Ms. Hines and Ms. Schlagenhauf, resigned last week.

The plaintiffs have requested a jury trial but a trial date is not expected until 2014.

In January, Keith Rabois, chief operating officer at Square, a mobile payments company  based in San Francisco, resigned amid charges that he had sexually harassed a male employee. He took a job as a venture capitalist at Khosla Ventures in February.

In May, sexual discrimination charges at the venture capital firm Kleiner Perkins Caufield & Byers shook Silicon Valley. In that suit, Ellen Pao, a former investment partner at the firm, claims that she was harassed into a brief affair with a colleague and that her efforts to deal with the matter and other instances of unseemly behavior resulted in retaliation. Ms. Pao also claims that the firm limited the career advancement of its female employees. Kleiner denies this.