Weinstein Co. Purchase Offer Deemed Unacceptable by New York AG
Harvey Weinstein was sued by New York officials for creating a hostile work environment at the Weinstein Co.
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(Bloomberg) -- New York Attorney General Eric Schneiderman said an offer to buy Harvey Weinstein’s film and TV company isn’t acceptable in its current form and he wants Harvey’s brother Robert off the board.
Schneiderman sued Harvey Weinstein and his company, adding to the embattled movie producer’s legal troubles and dealing a major setback to efforts to find a buyer for the Weinstein Co. and avert its bankruptcy. More than 100 jobs are at stake, one person familiar with the deal said.
Harvey Weinstein created a hostile work environment, with some employees being subjected to “pervasive sexual harassment,” intimidation and discrimination, according to the lawsuit, filed Sunday in New York state court. The 65-year-old mogul is trying to sell the studio to Maria Contreras-Sweet, a former Obama administration official, in a $500 million bid backed by billionaire Ron Burkle.
Schneiderman said at a news conference Monday the sale might leave victims “without adequate redress, including a lack of a sufficient victims’ compensation fund.” It would also keep victims “muzzled by insidious non-disclosure agreements,” he said.
The lawsuit doesn’t aim to block the sale to Contreras-Sweet’s group, the attorney general said, but was filed to protect the employees.
“Any sale of the Weinstein Co. must ensure that victims will be compensated, employees will be protected going forward, and that neither perpetrators nor enablers will be unjustly enriched,” Schneiderman said. “There was clearly a systemic breakdown in the company’s legal obligations, in their compliance.”
Weinstein, who faces a wave of sexual-assault claims stretching back to the 1970s, was ousted from his studio in October 2017 after the New York Times and the New Yorker Magazine published accounts in which women accused him of sexual harassment and rape. He has denied any non-consensual sexual activity.
Harassment Claims
A string of actresses have come forward to accuse the producer of sexually harassing or raping them. Actress Dominique Huett claimed Weinstein masturbated in front of her and performed oral sex on her in 2010. She sued his studio for $5 million. Actress Uma Thurman, who starred in some of Weinstein’s hit movies, such as “Pulp Fiction” and “Kill Bill,” has also accused the producer of assaulting her in London in 1994.
“We believe that a fair investigation by Mr. Schneiderman will demonstrate that many of the allegations against Harvey Weinstein are without merit,” his lawyer, Ben Brafman, said in a statement. “While Mr. Weinstein’s behavior was not without fault, there certainly was no criminality, and at the end of the inquiry it will be clear that Harvey Weinstein promoted more women to key executive positions than any other industry leader.”
Weinstein intends to fight the lawsuit if Schneiderman seeks to “scapegoat” him, Brafman added.
In the lawsuit, Schneiderman seeks steep financial penalties from Weinstein, his brother and the New York-based firm; victim restitution; and a court order that would invalidate non-disclosure agreements signed by women who had contact with the producer.
Schneiderman said Monday that his office attempted to alert the purchasers about the results of its investigation, hoping that an accord could be reached and policies implemented that would protect victims and employees, but said he was rebuffed.
The studio said in a statement that its board is disappointed with the lawsuit as many of the allegations are inaccurate. There is no truth to any suggestion that the studio impeded its suitor’s access to the state’s attorney general and the company looks forward to bringing the situation to an appropriate resolution, according to the statement.
"When an attorney for a purchaser says ‘Why should we talk to you?’ that tells you all you need to hear," Schneiderman said. "One of the things we’re seeking is cooperation. If I were trying to purchase the assets of the company, I would want to negotiate a settlement of this complaint as part of the deal."
Schneiderman also said he was getting resistance from Weinstein Co. officials, saying while his investigators have obtained a "form" of Weinstein’s personnel file, they were told "the physical personnel file had gone missing, which is another issue of concern for us."
Contreras-Sweet, the former head of the Small Business Administration under Obama, offered to buy Weinstein’s studio and replace current directors with a majority of women. Contreras-Sweet’s investment group would assume most of the liabilities of Weinstein Co. and create a fund to compensate victims of sexual harassment. The offer was for $500 million including an assumption of $225 million of debt, according to the person close to the deal.
While the parties were still working on the terms when the suit was filed, 15 percent of the emerging company would have been owned by Burkle, the person said. David Glasser was lined up as the new CEO, according to Variety -- a proposal Schneiderman called unacceptable. Glasser is chief operating officer at the Weinstein Co. and has been at the company for almost a decade. A decision on who would lead the company hasn’t been made, the person said.
Burkle also has an existing and long-standing relationship with the Weinstein Co., credited as an executive producer on films such as “August: Osage County” and the recent sequel to “Crouching Tiger, Hidden Dragon,” according to IMDB.com. Representatives for Burkle and Glasser didn’t respond to requests for comment.
Blind Eye
The attorney general said the Weinstein Co. has repeatedly turned a blind eye to its co-founder’s sexual misconduct. Schneiderman said his investigation found there have been not only “dozens” of formal complaints against Weinstein during his 12 years as movie studio head but also “many more informal complaints.” Not once had company management or human resources conducted any investigation, as required by law, Schneiderman said.
“The company’s management was complicit in this pattern of misconduct,” Schneiderman said. “David Glasser who supervised the human resources department did not stop this discrimination, harassment and abuse even though he was in charge of handling dozens of shocking complaints.”
The suit details numerous instances where Harvey Weinstein, identified in the complaint by his initials, allegedly assaulted, harassed or intimidated female employees. It claims that groups of women at the firm were compelled to facilitate his “sexual conquests” as a condition of employment.
The case is New York v. the Weinstein Co., New York Supreme Court (Manhattan).
--With assistance from Christopher Palmeri and Erik Larson
To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net, Anousha Sakoui in Los Angeles at asakoui@bloomberg.net, Patricia Hurtado in Federal Court in Manhattan at pathurtado@bloomberg.net.
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Jessica Brice, Mark Schoifet
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