August 28, 2018 / 6:58 PM / 3 months ago

UPDATE 2-Ex-CEO sues Barnes & Noble over ouster linked to alleged harassment

(Recasts, adds Barnes & Noble comment, details from complaint, byline)

By Jonathan Stempel

NEW YORK, Aug 28 (Reuters) - Barnes & Noble Inc was sued on Tuesday by a former chief executive officer who said the largest U.S. bookstore chain falsely accused him of violating its sexual harassment policy before firing him after 14 months on the job.

In a complaint filed in Manhattan federal court, Demos Parneros accused Barnes & Noble of breach of contract and defamation over his sudden July 3 termination without severance.

Parneros accused founder Leonard Riggio, who owns more than 19 percent of Barnes & Noble, of engineering his firing after turning on him when an unnamed bookseller withdrew a takeover bid for the New York-based company in early June.

He also said Barnes & Noble falsely accused him of mistreating then-Chief Financial Officer Allen Lindstrom, who Parneros considered a "poor performer" on business-related matters, according to the complaint. Lindstrom and two others now share the CEO role.

Lindstrom was not immediately available to comment.

In a statement, Barnes & Noble's board of directors called Parneros' lawsuit "an attempt to extort money from the company by a CEO who was terminated for sexual harassment, bullying behavior and other violations of company policies."

The board said Riggio "upholds the highest standards of integrity and decency," and called Parneros' allegations about him "replete with lies and mischaracterizations."

Parneros said he had not violated company policies and "always conducted himself in a professional manner."

He is seeking more than $4 million of severance, plus other compensatory and punitive damages. Parneros' lawyer, Debra Raskin, declined to elaborate on the complaint.

Barnes & Noble has been struggling with years of falling sales and foot traffic as Amazon.com Inc and other rivals take away business.

Parneros joined in late 2016 as chief operating officer, after 28 years at Staples Inc, and succeeded Riggio as CEO six months later.

According to the complaint, Riggio became "extremely upset" when the takeover bid fell through, believing it denied him a "graceful exit" from the company.

The complaint said Riggio stopped returning Parneros' phone calls and texts, while continuing to meet with other executives, despite there being "no suggestion" Parneros was at fault.

But Parneros said Riggio told him on July 2 he would be "fired for cause for violating the sexual harassment policy and cited his interactions with an executive assistant and purported mistreatment of Allen Lindstrom."

Barnes & Noble's announcement of Parneros' termination said it was for "violations of the company's policies," and not disagreement over its financial practices.

The complaint said Barnes & Noble's "defamatory statements have caused Parneros significant injury."

The case is Parneros v Barnes & Noble Inc, U.S. District Court, Southern District of New York, No. 18-07834. (Reporting by Jonathan Stempel in New York; Editing by Marguerita Choy)

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