For more than a decade, young women complained that Paul Marciano, co-founder and Chief Creative Officer of Guess? Jeans, sexually harassed them while they were working as models for the company. They said that Marciano propositioned them for modeling contracts in exchange for sexual favors, terminated or rejected their employment opportunities if they refused his unwanted advances, and offered hush money to models to ensure that his misconduct would not be revealed. Indeed, back in 2009, when a model went to the Guess human resources department and told them about a sexual assault by Marciano, she was told “this is not the first time this has happened”.
Finally, after supermodel Kate Upton went public in 2018 with her story of having been groped and forcibly kissed by Marciano when she was a teenager, the Guess Board of Directors ordered an internal investigation. But the directors, which included Paul Marciano’s brother and co-founder Maurice, didn’t take the investigation seriously. Even though the investigative report concluded that plausible allegations of improper conduct “could, and did, arise” and Paul Marciano was briefly removed as CCO, he was quickly reinstated, and continued as a Board member throughout.
The stream of allegations of Paul Marciano’s predatory behavior continued, and Guess paid $1 million to settle lawsuits in 2022 from a pair of models who accused Paul Marciano of abusing them. Then, a state pension system that owned Guess stock brought a suit against not only Paul Marciano in his capacities as an officer, director, and controlling stockholder of Guess, but also against the entire Board of Directors. The suit claimed that the directors harmed Guess by willfully ignoring models’ allegations of sexual abuse and allowing Paul Marciano to maintain his seat on the Board and serve out his term of employment as Chief Creative Officer.
After more than a year of vigorous litigation, settlement of the case for $30 million was approved by the Delaware Court of Chancery in January, 2024. Paul and Maurice Marciano, who retired from the Guess board under pressure, will pay $12 million between them, with the rest coming from Guess’s insurers. The money is not going to the pension fund but will be paid into the Guess corporate treasury to reimburse the company for its monetary losses and damage to its corporate image and goodwill. Lawyers for the pension fund will receive nearly $5.5 million in fees and expenses.
Beyond that, the settlement requires Guess to undertake significant corporate reforms. The company will add two independent directors to its board, one of whom will have expertise in combatting sexual harassment. The company will create an independent diversity, equity and inclusion council with the ability to investigate sexual misconduct allegations and implement changes. Also, human resources will report directly to the CEO, rather than Paul Marciano. Finally, Paul Marciano is now forbidden to have any private meetings with models or potential models.
What this means to you:
Corporate culture starts at the top. When there are problems within an organization, they usually begin with the leadership. Sometimes the rot happens swiftly; other times, it’s a slow and agonizing decay. No matter which, bad leadership will undoubtedly infect the entire organizational framework and culture.
At Fair Measures, we specialize in creating respectful workplaces for businesses by training executives, managers, and employees about how to create shared organizational culture based on values, policies, and laws. We offer our courses—led by experienced attorney-trainers–both in the classroom and by interactive webinar.
One of the problems noted in Guess suit was that Paul Marciano had not completed the annual anti-harassment training for five years. Do you have managers, supervisors, or employees who have missed your scheduled trainings? We are offering public sessions of the Managing Within the Law webinar and the Harassment Prevention Training webinars quarterly throughout 2024. Call us today at 800-458-2778 or email us to find out more or to book a workshop.
Updated 01-16-2024
Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.
