Shareholders Sue Signet-Zale Jewelry Chain

DALLAS (CN) — Jewelry retail giant Signet Jewelers failed to disclose the sworn testimony of more than 100 employees who said executives and managers were involved in sexual misconduct, shareholders claim in a federal class action.

Lead plaintiff Maria Mikolchak sued Akron, Ohio-based Signet, its CEO Mark S. Light and former CEO Michael Barnes on March 31.

Signet operates roughly 3,000 stores in all 50 states under the Sterling, Zale, Kay, Gordon’s Jewelers and Piercing Pagoda names, among others.

Mikolchak’s nondisclosure allegations are rooted in a Equal Pay Act and gender discrimination class action female employees filed in 2008 in the Southern District of New York, which was sent to arbitration. Those plaintiffs filed for class certification in the arbitration in June 2013.

“Among the exhibits to their class certification motion were the declarations submitted under seal by current and former female and male employees, spanning over 1,300 pages of evidence that include strikingly similar allegations of sexual harassment, including sexual assault,” the new complaint states.

“Approximately half of the declarations, over 100 employees, provided sworn testimony about sexual misconduct implicating executives and top managers of the company. The declarations were provided to the arbitrator and the defense, but they were not made available to the public until February 26, 2017.”

Mikolchak claims Signet’s public statements failed to disclose that approximately 250 former employees of subsidiary Sterling Jewelers made sworn statements about executives presiding “over a corporate culture that fostered rampant sexual harassment and discrimination.” Mikolchak claims Light himself was accused of having sex with female employees and “promoting women based upon how they responded to sexual demands.”

“(I)t was unlikely that Signet would be able to avoid paying a sizable amount of damages in connection with the class action lawsuit filed by Sterling employees,” the complaint states. “As a result, defendants’ statements about the company’s business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times.”

After The Washington Post published a Feb. 27 article about the employee allegations, share prices fell $9.29, nearly 13 percent, according to the complaint.

Signet Vice President David A. Bouffard told Courthouse News that both lawsuits are “wholly without merit” and that the company will “vigorously defend” against them.

“Since the arbitration case was filed in 2008, Signet has fully met its disclosure requirements,” Bouffard said Monday. “Contrary to the shareholder suits and earlier media coverage, the arbitration case is focused on the company’s pay and promotions practices for women in certain positions within our field operations team, not sexual harassment. In fact, there are no legal claims on behalf of the class alleging sexual harassment. Any references to such allegations to support claims of intentional discrimination in pay and promotions was rejected by the arbitrator several years ago.”

Bouffard said the company has taken the allegations of pay and promotion discrimination “very seriously” in the arbitration.

“We have thoroughly investigated the allegations and have concluded they are not substantiated by the facts and certainly do not reflect our culture,” he said. “Therefore, we will continue to contest them in the arbitration proceedings.”

Mikolchak seeks class certification and compensatory and punitive damages under the Securities Exchange Act. She is represented by R. Dean Gresham with Steckler Gresham in Dallas.

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