UR settles sexual harassment suit for $9.4 million

The University of Rochester will pay $9.4 million in a settlement agreement announced Friday with nine former professors and students who sued the institution in 2017 over its handling of sexual harassment complaints. 

The parties released a joint statement, thanking the plaintiffs for stepping forward, and listing some of the lengths the university went to in order to fight the case, including commissioning a $4.5 million report that concluded there was no case, while also supporting the plaintiff’s claims as factual. Friday’s statement also acknowledged changes the university has made to prevent similar situations.

The suit against then-President Joel Seligman, Provost Robert L. Clark, and the university was filed in December 2017 over their handling of harassment complaints about professor T. Florian Jaeger in the university’s Brain and Cognitive Science Department. Jaeger himself was not named in the suit and continues to work at the university. The UR Faculty Senate voted to censure him in March 2018. 

According to the joint statement, “The impact of the plaintiffs’ efforts has resulted in real improvement to the University processes and resource allocation for current and future prevention, investigation and remediation of situations reported to involve harassment and other forms of discrimination, as well as retaliation for reporting such matters.” 

In a separate statement, a university spokeswoman said, “We are pleased to have achieved a successful mediated resolution to this matter. The willingness of our insurance carrier to pay the entire settlement amount was a factor in our decision. No party to the settlement admitted liability or fault.”

The statement continued, “The last few years have been challenging for everyone at the University, and we now face significant additional challenges due to the COVID-19 pandemic. We can now put this particular issue behind us, focus on our present concerns, and look ahead to the future.”

The students and professors who sued, meanwhile, have all moved on, some saying they were left with no other choice after they were harassed and retaliated against for their complaints or for supporting the women who complained about Jaeger’s behaviors. 

Dr. Ann Olivarius, the plaintiffs’ chief lawyer, said: “It is very unusual for senior professors to band together with junior faculty and students, as happened in this case, to try to protect students from harassment. Our clients have had to leave jobs, research collaborations and a community they loved and move across the country because the University dug in when it should have taken their complaints seriously. We commend UR for improving its policies and turning the page on this very long struggle.” 

Two professors and plaintiffs, Celeste Kidd and Jessica Cantlon, one a graduate student and one a junior faculty member in brain and cognitive science at UR when complaints about Jaeger’s sexually suggestive behaviors first surfaced, earned national recognition when they were named in a group of “silence breakers” as Time Magazine’s 2017 Person of the Year. 

Cantlon said on Friday the settlement gives her a new sense of purpose to highlight the experiences of women on the job and the institutional pushback they face when they complain of harassment. 

“That’s an injustice I’m acutely aware of and one that I will work to overcome,” she said.

Cantlon and her husband, fellow plaintiff Brad Mahon, now work at Carnegie Mellon University. 

“Losing our homes, our friends, jobs we loved, and lives, and having to start completely over was a very hard experience for us. It’s incredibly sad to have those things happen to you when you think you’re doing the right thing,” she said.  

Cantlon said the size of the settlement will make other universities take note of the issues in the suit and perhaps change their own policies. 

UR became the subject of many protests by students and others over the handling of the case and the continual turmoil eventually led to Seligman’s resignation in 2018. He announced his resignation the same day that the report UR commissioned by Mary Jo White, a former U.S. Attorney who led the investigation, was released in January 2018. White’s report said it did not find evidence of retaliation against the complainants, but noted gaps in the university’s policies and errors in its actions that could have prevented the situation from becoming so contentious. 

Since the suit was filed, the university has established its Office of Equity and Inclusion, reviewed and strengthened politics and expanded training and resources in the area of sexual misconduct. 

The joint statement noted that this case had helped influence adoption of new state laws in New York regarding the handling of sexual misconduct complaints.

It also quoted retired Professor Richard Aslin, a former Dean of Arts and Sciences at UR, who was a plaintiff in the suit: “We hope this settlement encourages people affected by discrimination and retaliation to seek justice and never give up. We also hope the changes the University has made to its leadership and policies will send a signal to other institutions that there is a more productive way to handle complaints about harassment.” 

The plaintiffs have agreed to share some of the settlement with women who shared their experiences anonymously in the suit, “to help make up for educational experiences they missed out on, or for counseling,” Cantlon said. 

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New suit filed in Brighton’s Whole Foods conflict

A group opposing the Whole Foods grocery store project on Monroe Avenue has filed a new suit against the Town of Brighton over a document request it says was improperly handled.

The suit, filed Friday in Monroe County Supreme Court, alleges that during an August public meeting, the town Planning Board chairman “made a comment that the Planning Board had several secret meetings the public did not know about,” which would be illegal.

When the Save Monroe Ave. organization filed a Freedom of Information Law request for a transcript of the August meeting, however, the town complied only with minutes of the meeting that did not provide a transcript of the chairman’s statement, while it did provide a verbatim record of other speakers, the suit said. An appeal was denied.

SMA is one of two groups – the other being Brighton Grassroots – challenging the town government by suing them. They oppose the project based on how much additional traffic it could bring to the area and other concerns. The developers, Daniele Family Businesses, have said although the town has approved their project, they cannot proceed with demolition or construction while the lawsuits are being considered in court.

SMA tried to have the court stenographer who was taking verbatim notes sign an affidavit, but neither she nor the town responded, the suit said. Further requests turned up an audio recording of the meeting, but the recording stopped before the chairman made his statement.

“Particularly concerning to SMA is the hidden agenda of the Town, which has side-stepped the law on multiple occasions to see that the project gets approved,” the suit said.

A request of town officials for comment on the suit drew no immediate response.

SMA has asked the court to grant their FOIL request within 10 days and order the town to pay for its legal and administrative costs.

The project would include a 50,000-square foot Whole Foods grocery store, a drive-through Starbucks and a small plaza or cluster of other businesses. The town approved it last year under a special permit process that allows a higher density of development than normally allowed in exchange for the developer providing amenities to the town. In this case the amenities involve a walking trail that would extend beyond the property on the north side of Monroe Avenue, installing a new traffic light, and creating a single access point for eight businesses on the south side of Monroe Avenue to streamline traffic flow.

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Shareholder sues Xerox over deal with Fuji

Fuji XeroxThe gloves are off.

Darwin Deason, Xerox Corp.’s third-largest shareholder, has filed a lawsuit against Fujifilm Holdings Corp.; Xerox; current Xerox board members; and Ursula Burns, Xerox’s former chairman and CEO. The complaint was filed Feb. 13 in the Supreme Court of the State of New York, New York County.

In the complaint, Deason alleges the following:

  • The Xerox/Fuji transaction is the result of an improper and fraudulently concealed “crown jewel” lock-up agreement that Xerox entered into with Fuji 17 years ago, that was never disclosed to Xerox’s shareholders before the signing of the Xerox/Fuji transaction;
  • The “crown jewel” lock-up agreement precludes a transparent and fair process for the potential sale of Xerox;
  • Despite its duty to do so, Xerox’s board fraudulently never disclosed the “crown jewel” lock-up;
  • Fuji and Fuji Xerox participated in a “WorldCom”-like accounting scandal that was uncovered in 2017 and gave Xerox the right to terminate the crown jewel lock-up provision, but the Xerox Board failed to terminate the provision;
  • Xerox publicly admitted that the lock up “limit[ed] Xerox’s strategic flexibility,” which caused the Xerox board to sell 50.1 percent of Xerox to Fuji;
  • Xerox/Fuji deal is extremely off-market:
    – No control premium for Xerox shareholders
    – 50.1 percent/49.9 percent Fuji control
    – Xerox CEO and board members retain jobs
    – No Xerox market check or sale process
    – Xerox share price has declined 2.4 percent since the unaffected date (Jan. 10) to Friday’s close (date prior to issuance of Icahn/Deason letter); and
  • Deason seeks to enjoin the transaction, terminate the Xerox/Fuji joint venture lock-up and joint venture agreements and pursue strategic alternatives for Xerox.

For its part, Xerox officials said Deason’s allegations are without merit and the company will vigorously defend itself.

“After having considered all strategic alternatives available to the company, Xerox’s board of directors remains steadfast in its belief that the combination with Fuji Xerox is the best path to create value for the company and its shareholders. It is unfortunate that Mr. Deason is seeking to interfere with Xerox shareholders’ right to decide and is relying on meritless legal claims,” company officials said in a statement. “Xerox has fully disclosed the joint venture agreements, and the company will respond to Mr. Deason’s legal claims through the appropriate legal channels in due course.”

Xerox —on the heels of Monday’s open letter from shareholders Deason and Carl Icahn—is calling many of the Icahn/Deason letter’s statements “misleading” and “inaccurate.” Xerox’s board has thus far declined to engage in a public debate, officials said Tuesday morning, but the letter “warrants a written response to ensure the facts are clear for all Xerox shareholders.”

In their letter, the two shareholders, who collectively own about 15 percent of Xerox’s shares, called to issue a deal between Xerox and Fujifilm in which “without putting up any cash, (Fuji) will receive (1) an additional, indirect 25 percent interest in a Fuji subsidiary that just last year disclosed a $360 million accounting scandal caused by a ‘culture of concealment’ and Fuji’s failure to have adequate management systems, and (2) a one-time special dividend financed with our own assets.”

When Fuji and Xerox announced the $6.1 billion deal Jan. 31, it was noted that the merger would give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

Fujifilm, following the merger announcement, said it would slash 10,000 jobs globally at the Fuji Xerox subsidiary, which last year employed more than 45,000 people.

In its statement Tuesday, Xerox said the proposed combination of Xerox and Fuji Xerox followed a year-long review of value-enhancing alternatives available to the company. That review found that the proposed merger “delivers significantly more value to Xerox shareholders than would be achievable on a standalone basis.”

Icahn and Deason have asked shareholders to reject the deal, citing a number of issues. The two shareholders contend that the economics of the transaction disproportionately favor Fuji at Xerox shareholders’ expense.

“When we sketch out the financials of the deal, this is our conclusion,” Icahn and Deason wrote. “We—the existing Xerox shareholders—are selling approximately $535 million of normalized annual recurring cash flow for about $1.25 billion. In other words, we are selling control of Xerox for a cash flow multiple barely exceeding 2.3x.”

But Xerox in its statement called their math “suspect.”

“This analysis is just plain wrong,” Xerox officials wrote. “As discussed in prior presentations to investors, Xerox shareholders receive in the transaction a $2.5 billion dividend at closing; 49.9 percent of the combined Xerox and Fuji Xerox; and 49.9 percent of the benefit of the value created from at least $1.7 billion of annual cost savings, including $1.25 billion in cost synergies that are only achievable via this transaction.”

Icahn and Deason in their letter suggested “freeing the company from the shackles of the Fuji Xerox joint venture,” a strategy that Xerox officials say is not viable.

“The joint venture between Xerox and Fujifilm has existed in various forms since 1962,” Xerox officials note. “The current structure dates to 2001, when Fujifilm acquired additional shares in the joint venture to bring its ownership to 75 percent.”

The agreement is a binding legal document “that cannot be simply wished away, renegotiated or dissolved because Mr. Icahn and Mr. Deason desire it so.”

To Icahn and Deason’s claim that Xerox shareholders will become passive minority owners, with no opportunity to receive a control premium, Xerox officials said its board negotiated “strong minority protections,” including five independent Xerox designated directors to serve for five years.

Xerox also noted that Chief Executive Jeff Jacobson—whose firing Icahn and Deason have demanded for weeks—will represent one of the seven Fujifilm board designees and serve as CEO of the combined company.

The document company noted that while Icahn and Deason contend that the company’s revenue and margin have continued to decline in the last three years, its full-year 2017 results “clearly demonstrate that the strategy we have implemented is working as we met or exceeded every financial metric we guided to in 2017.”

“In conclusion, Mr. Icahn and Mr. Deason fail to provide an actionable plan or any cogent ideas to make their scheme a reality,” Xerox officials said in their statement. “Following their playbook would be both highly irresponsible and unlikely to succeed, particularly given the terms and constraints of the existing Fuji Xerox joint venture agreement, and the realities of today’s competitive environment.”

Icahn on Feb. 5 sold 140,011 shares of the company’s stock, at a total value of $4.55 million. The transaction was disclosed in a Securities and Exchange Commission filing last week. Shares of Xerox stock (Nasdaq: XRX) were down more than 2 percent to $29.25 in Tuesday morning trading.

[email protected] / 585-653-4021

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