In a legal filing, Barnes & Noble hit back at Demos Parneros, claiming the recently fired CEO actively sabotaged a potential sale of the company earlier this year, bullied fellow executives, and sexually harassed multiple women at the company. And raising the legal stakes, lawyers for B&N have filed a counterclaim, asking the court to order Parneros to pay damages for his alleged breach of fiduciary duties, and seeking to potentially claw back more than $1 million paid to Parneros “during the period of his disloyal conduct.”
The filing comes in response to Parneros’s bombshell breach of contract and defamation lawsuit, filed August 28, which alleges that B&N founder Len Riggio, irate over the collapse of a sale this summer to an unnamed book retailer, engineered Parneros’ firing so he could retake control of the company. In his suit, Parneros acknowledges that an unnamed book retailer withdrew a bid in June after completing due diligence, but claims “there was no suggestion that the failure of the deal was in any respect Parneros's fault.”
In a stunning claim, however, B&N lawyers now allege that Parneros didn’t just botch the sale of the company this past summer, but actively derailed it, "apparently in an effort to preserve his position as CEO." The filing portrays a reluctant, even defiant Parneros, interfering with and even undermining a months-long due diligence process, with things coming to a head at a disastrous June 18 meeting, which the purchaser had called in part to get a handle on a recent sales decline at B&N.
At that meeting, B&N lawyers allege, Parneros "embarked on a long, rambling monologue, which failed to address the issues and questions posed by the Potential Acquirer," the brief states, and instead "portrayed the Company in an extremely and unduly negative light, with no realistic prospects for success.” The filing says Parneros described B&N as an “ugly mess,” at the meeting, complained that the company had “no talent before he arrived," and failed to provide any “positive information concerning initiatives that the Company had made in 2018 or about the Company’s expectations for growth in 2019.”
As a result, B&N lawyers say, the potential acquirer cut the meeting short, cancelled a dinner scheduled for that night, and the next day informed Riggio that it was withdrawing the bid.
As to the sexual harassment claims, the suit refers to a female employee reporting two incidents “in which she was subjected to unwanted touching and/or unwanted comments of a sexual nature by Parneros,” which B&N lawyers say were fully investigated. The claims basically line up with accounts cited by Parneros in his suit—but in his suit, Parneros disputed the accounts, and says he met with the employee in question, in the presence of B&N’s head of HR, and at Riggio’s suggestion, to apologize for any misunderstanding.
In the filing, Barnes & Noble now says that, since his termination, the company has “received additional complaints about Parneros’s inappropriate behavior toward women.”
Parneros was abruptly fired, without severance, on July 3 for “violations of the Company’s policies,” although the company at the time did not say why, initially revealing only that the firing was not due to the company's "financial reporting, policies or practices, or any potential fraud relating thereto.”