In a November 22 filing, lawyers for Barnes & Noble moved for summary judgment on two of the three claims filed against them by fired CEO Demos Parneros, seeking to knock out the two most dangerous—and potentially costly—causes of action against the company.
In a 33-page supporting memorandum, B&N attorneys argue that Parneros’ claims for defamation and for breach of the covenant of good faith and fair dealing fail because there is no evidence to support them.
The filing adds few details to what has already been alleged, but it does lay out a straightforward, blunt assessment for why the B&N board voted unanimously to oust Parneros in the summer of 2018. Presented in order, the filing states that the board voted to fire Parneros for: one, “sexual harassment;” two “bullying behavior,” specifically against the company CFO Allen Lindstrom; and three, Parneros’s conduct in allegedly “undermining” a potential sale of the company at a June 18, 2018, meeting with the potential buyer.
In seeking summary judgment, B&N lawyers argue that Parneros’s defamation claim arises entirely from the company’s July 2, 2018, press release announcing Parneros’s dismissal, but say that release was “carefully reviewed” by the company’s board, and is "indisputably true." Notably, the press release does not name any specific cause for his dismissal, instead stating only that Parneros's abrupt dismissal was for violations of company policy "not due to any disagreement with the Company regarding its financial reporting, policies, or practices or any potential fraud relating thereto."
“Truth is the ‘ultimate defense’ for defamation,” the B&N brief states. “Because the truth of each factual statement in the press release is undisputed, Plaintiff’s defamation claim fails and summary judgment is warranted.”
Meanwhile, B&N attorneys say that Parneros’s claim that B&N breached the covenant of good faith is rooted in the company’s decision not to give Parneros his equity award. But, with discovery now mostly completed, they argue there is no evidence that the company “acted in bad faith or with deliberate purpose” in depriving Parneros of his equity award, and was well within its contractual rights to withhold the equity payment and any severance because the CEO was terminated for cause.
In his bombshell breach of contract and defamation lawsuit, filed August 28, 2018, Parneros alleges that B&N founder Len Riggio, irate over the collapse of the potential sale, engineered Parneros’ firing.
If the defamation and good faith claims are ultimately defeated in a summary judgment, it would leave only Parneros’s breach of contract claim for trial, for which, previous filing states, the former CEO seeks approximately $6.4 million. By contrast, Parneros is seeking “approximately $70 million” in damages for the defamation claim alone, previous filings state.
Barnes & Noble is also countersuing Parneros, seeking to claw back some of the CEO’s compensation.
But while B&N attorneys lay out a simple, straightforward case in their motion for summary judgment, judge John G. Koeltl warned the company earlier this month that winning summary judgment on the two counts would not be easy.
In a November 4 conference, Koeltl repeatedly warned that B&N's bid for summary judgment was a “risky” move, and urged the parties to consider settlement discussions. At the hearing, Koeltl acknowledged the upside for B&N in potentially knocking out the biggest claims in Parneros' case ahead of a trial, but he warned that winning at the summary judgement stage would not be "straightforward," and warned of the downside should B&N receive "an adverse decision" on the motion.
Parneros' response to the motion is now due by January 15, 2020; and a B&N reply is due by February 12, 2020.