Nike Shareholders Refile Lawsuit Alleging Top Execs Knew About ‘Hostile Work Environment’

A month after a judge tossed a lawsuit filed by three shareholders against Nike Inc.’s board of directors, the investors have refiled the case, which also names several of the brand’s top executives.

In their argument, the shareholders alleged that a number of high-ranking Nike officers — including co-founder Phil Knight, CEO Mark Parker and former brand president Trevor Edwards — had “knowingly ignored the hostile work environment that has now harmed, and threatens to further tarnish and impair, the company’s financial position.”

The lawsuit, which was originally filed in September, alleged that the executives “failed to investigate allegations of sexual harassment and discrimination; act to prevent members of management from harassing and discriminating against female employees [and] failed to implement adequate internal control and reporting programs to prevent the creation and maintenance of this hostile work environment.”

The shareholders had sought at least $10 million in damages from the firm’s directors as well as another $10 million from Edwards.

In mid-April, an Oregon Circuit Court judge granted Nike’s motion to dismiss the suit. In her ruling, Judge Leslie Bottomly said the plaintiffs did not demonstrate that the directors were aware of supposed illegal conduct or that they “consciously disregarded” such behavior. (She also granted Edwards’ motion to dismiss the plaintiffs’ claims of unjust enrichment on his part.)

At the time, Gustavo Bruckner, an attorney for the plaintiffs and partner at Pomerantz LLP, said his firm had planned to refile the case.

Now the refiled lawsuit has two new defendants and two new claims of unjust enrichment — one against former human resources chief David Ayre and another against Jayme Martin, who worked directly for Edwards.

In a statement sent to FN, Nike wrote, “As we said before the court granted our motion to dismiss, Nike’s board of directors acted swiftly, responsibly and decisively to protect the interests of both Nike employees and shareholders.”

The suit marked the second major legal complaint against Nike since last April’s exposé and management shakeup. (The company admitted then that it had fallen short in promoting women and people of color, and two months later announced a plan to raise salaries for 10% of its workforce to help correct pay inequity.)

In August, former employees Kelly Cahill and Sarah Johnston sued Nike, alleging that it had “intentionally and willfully” discriminated against women with regard to pay and promotions, adding that its majority-male executives fostered a hostile work environment at its Portland, Ore., headquarters. Federal Magistrate Judge Jolie Russo recommended in February that the brand’s motion to dismiss class and collective claims be denied.

A month later, the sportswear giant was hit with a racial discrimination suit by former software developer Ahmer Inam, who claimed that he was denied a promotion in favor of a white executive who had less experience.

Nike has maintained throughout the events that it “opposes discrimination of any type and has a long-standing commitment to diversity and inclusion. We are committed to competitive pay and benefits for our employees. The vast majority of Nike employees live by our values of dignity and respect for others.”

Watch FN’s interview with Nike trainer Joe Holder.

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