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New York Attorney General Launches Investigation Into Weinstein Co.

New York’s attorney general Eric Schneiderman has launched an investigation into the Weinstein Co., seeking information on whether officials at the company violated state or city civil rights laws.

“No New Yorker should be forced to walk into a workplace ruled by sexual intimidation, harassment, or fear. If sexual harassment or discrimination is pervasive at a company, we want to know,” Scheiderman said in a statement.

A person familiar with the investigation said that the Attorney General’s civil rights bureau issued a subpoena on Monday seeking “all documents, records, and correspondence related to all complaints, whether formal or informal, relating to sexual harassment or other discrimination on the basis of gender or age, against any employee or management employee.”

They are also seeking information on how complaints were handled, whether a formal investigation was initiated, and records related to settlements or other dispositions.

Additionally, they are seeking “documents concerning management’s criteria to hire, promote, cast, select, reject or terminate applicants or employees.”

The investigation is of whether officials at the company violated state civil rights law or New York City’s human rights law. The attorney general’s civil rights bureau typically investigates whether reports of sexual harassment are part of a pattern, practice or policy in a workplace.

A spokesman for the Weinstein Co. did not immediately return a request for comment.

The investigation is a reflection of how the Weinstein scandal has shifted into wider questions of who was aware of the allegations before they were made public in stories in The New York Times and the New Yorker earlier this month about settlements Weinstein made with a number of accusers. That has led to a cascade of accusations of sexual harassment and sexual assault against Weinstein. He has denied claims of non-consenual sex.

The New York attorney general’s investigation could shed light on what the board knew and what they did about it. The New York Times reported that the board of the company was aware of the payouts, even as Weinstein’s brother Bob and other remaining board members claimed that the accusations came as a surprise. TMZ reported that Weinstein’s contract, signed in 2015, had clauses in which he would have to reimburse the company for settlements and judgment, along with a fine.

That has raised the issue of whether board members could face liability. Francis G.X. Pileggi, attorney at Eckert, Seamans, Cherin & Mellott and an expert in corporate litigation, said that the question is whether the board knew about a pattern of sexual harassment by Weinstein but failed to take action. The company is incorporated in Delaware, so Delaware Chancery Court likely would have jurisdiction.

“If it is correct that the board knew about this propensity and the future likelihood of an occurrence, then the question would be whether the board was fulfilling its fiduciary duty,” Pileggi said.

Similar issues may come into play with 21st Century Fox, after reports that the company had knowledge of Bill O’Reilly’s settlement with an accuser but then re-signed him to a new contract in February. He left the show in April after the New York Times published a story detailing multiple settlements with women accusers.

Pileggi said that 21st Century Fox, also incorporated in Delaware, could face what is known as a “Caremark” issue, named for a Court of Chancery decision. The law requires that the board take action if it is aware of “red flags” that “would make a reasonable person — who has a duty to advance to best interests of the company — take action and avoid further harm to the company, especially in the contest of a likelihood that the company’s agent may violate the law and bring harm to the company.”

 

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