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  • Anthony Chase

Shea’s board comes out swinging

  • Murphy was fired for his unwillingness or inability to work with the Board in responding to complaints about him

  • The words “toxic,” “temperamental,” “chaotic,” “volatile,” prone to “fits,” and “privileged” are neither gay coded nor discriminatory

  • Shea’s success has nothing to do with Murphy’s talents or decision-making



On October 27, 2022, Michael Murphy, former president of Shea's filed a lawsuit, seeking compensation for breach of contract, failure to pay a bonus to which he was entitled, anti-gay discrimination, retaliation, and defamation.


Shea’s responded to Murphy’s complaint on November 26, 2022, with a detailed and meticulously supported request for dismissals. It’s a page turner.


Highlights include an impassioned denial that Murphy suffered any discrimination because he is gay, and a succinct statement from John Herbert, Shea’s Vice President of Finance and Administration, contradicting Murphy’s claims that he, personally, was "largely responsible for Shea's growth and success."


By contrast, Herbert asserts that “much of Shea's success in recent years was due to two specific factors: the engagement of Hamilton and the access to federal relief funds.” Regarding increases in income, Herbert observes, “That revenue was a direct result of the popularity of Hamilton and is not attributable to any expertise of or decision making by Mr. Murphy. Any theater in the country would have sought to book Hamilton and would likely have experienced similar success.”


Following the filing step by step


In his complaint, Murphy asserted five "causes of action."

  • FIRST CAUSE OF ACTION: Breach of Contract

  • SECOND CAUSE OF ACTION: Sexual Orientation Discrimination

  • THIRD CAUSE OF ACTION: Retaliation in Violation of New York Human Rights Law

  • FOURTH CAUSE OF ACTION: Violations of New York Labor Law (including the bonus)

  • FIFTH CAUSE OF ACTION: Defamation

Murphy demanded the following judgments against Shea’s:

(a) on the first cause of action in an amount not less than $264,000;

(b) on the second cause of action in an amount not less than $1,000,000;

(c) on the third cause of action in an amount not less than $1,000,000;

(d) on the fourth cause of action in an amount not less than $150,000;

(e) on the fifth cause of action in an amount in excess of the jurisdictional limits of all lower courts; and (f) that includes such other, further, or different relief as the Court may deem just and proper, together with attorneys’ fees, costs, and disbursements of the action as permitted by statute and otherwise.


Shea's has responded as follows:


Murphy is not entitled to a bonus or to relief under labor law

The motion seeks a dismissal of that portion of the First and Fourth Causes of Action which alleges that Murphy was entitled to a bonus. “His contract unambiguously establishes that any bonus would be at the sole discretion of Shea’s board,” says Shea’s. “Mr. Murphy acknowledges in the Complaint that he did not receive a bonus for the years 2018–19; 2019 – 20; 2020 – 21; and/or 2021–22 establishing that pattern of practice in addition to the written words.” Shea's also asserts, regarding the fourth cause of action, that "Murphy is not an 'employee' as that term is defined under Labor Law, but is, instead, "a highly compensated executive for whom relief is not available under Labor Law."


Murphy suffered no discrimination for being gay

Shea’s then notes that “Murphy alleges only that he was discriminated against because Shea’s allowed him ‘to be subjected to comments about his management style which were directed at him as a gay man.’ The document quotes the supposedly discriminatory words cited in Murphy’s complaint -- “toxic,” “temperamental,” “chaotic,” “volatile,” prone to “fits,” and “privileged” – and notes that "these adjectives, are not known to be discriminatory and are, therefore, insufficient to be the basis for a claim of discrimination.”


Murphy never complained about discrimination before his termination, negating his claim of retaliation

Shea’s then rejects Murphy’s claim that he ever made a report of alleged discrimination. Shea’s notes that Murphy’s complaint alleges that he made a complaint of discrimination directly to James R. Grasso, who was then counsel to Shea’s. In support of their rejection of this claim, Shea’s provides an Affirmation from Grasso “specifically and directly denying that any such report was ever made and more specifically asserting that he never relayed any such report to Shea’s board executive committee or decision makers.”


In addition, Shea’s provides a statement from James J. Eagan, Shea’s Board member and Treasurer, establishing that prior to taking action to terminate Murphy the Board was unaware that Murphy would allege discrimination or harassment based on his sexual orientation, undermining Murphy’s claim that his dismissal was a form of retaliation. In other words, the board could not have fired him in retaliation for something that never happened.


The frank observations of staff members do not constitute defamation

Shea’s seeks dismissal of Murphy’s Fifth Cause of Action, “defamation,” arguing that Murphy “fails to identify the speaker of any specific defamatory statement and or to identify the time and place and specific words used.” Specifically, they argue that “the Complaint states that Shea’s employees, former and current, made such statements outside of the scope of their employment to a reporter,” and that such statements of “unnamed ‘current and former’ Shea’s employees,” made “outside the scope of their employment to reporters concerning the terms and conditions of their employment, even if proven, would not establish liability of Shea’s as the employer.”


“In addition,” the document continues, “the words used express the speaker’s pure opinion about Mr. Murphy’s management style and would not constitute defamation in any context.”


Moreover, the document continues, “statements made by employees as to the terms and conditions of their employment would be protected speech under the National labor Relations Act and Shea’s had no ability to control such statements.”


Murphy was fired for his unwillingness or inability to follow the direction of the board

The affidavit from Eagan is quite revealing, providing specifics previously unavailable. Eagan explains that Murphy’s contract allowed Shea's to terminate him for cause at any time, upon written notification.


He elaborates.


“Facing difficult times with complaints about Mr. Murphy's management and treatment of the staff, the Board sought to resolve the issues and worked hard with staff, consultants, and Mr. Murphy to find an agreeable path forward. The Board retained two separate consultants to consider the staff complaints and Mr. Murphy's management style. Both consultants reported that although some of the more salacious complaints appeared unfounded, there were issues that Mr. Murphy needed to address. Unfortunately, Mr. Murphy was incapable or unwilling to follow the direction of the Board and the continuing controversy was detrimental to Shea's interest and threatened to cause damage to Shea's operations and our donor base. On October 18, after a more than two-hour special meeting the Board voted to terminate Mr. Murphy's employment with Shea's for cause.”


And, lest there be any doubt, Eagan spells it out: “To be clear, Mr. Murphy was not terminated because of staff complaints, he was terminated due to his unwillingness or inability to work with the Board in responding to the complaints and fashioning a path forward.”


Eagan characterizes Murphy’s “unwillingness of inability to work with the board,” as “direct disobedience of directions from the Board, including his refusal to meaningfully cooperate with the Board's consultant and senior staff to develop and adhere to a new management plan.”


Murphy's sexual orientation had absolutely zero bearing on the decision to terminate his employment

Eagan explains the discretionary nature of the bonuses described in Murphy’s contract, but he dedicates special attention and passion to refuting Murphy’s allegation of discrimination based on his sexual orientation.


I was dismayed to read the allegations in the Complaint that Mr. Murphy had been discriminated against or harassed at Shea's based on his sexual orientation, and that the Board had terminated him in retaliation for reporting such discrimination,” says Eagan. “Shea's is an open and inclusive organization that employs and works with individuals of varying backgrounds, ethnicities, gender identities, and sexual orientations. Discrimination goes against the principles Shea's stands for and would never be tolerated. Mr. Murphy has been openly gay. His sexual orientation had been widely known when he was hired. It had no bearing on his hiring or his termination. I [met] with Mr. Murphy and others as we tried to work through the difficulties he was having with his relationship with Shea's senior management and staff. At no time during those meetings did Mr. Murphy ever suggest that the difficulties were related to discrimination or harassment based on his sexual orientation. That includes a meeting as recently as August 2, 2022, at which the Executive Committee, our counsel James R. Grasso, Mr. Murphy and his counsel Lisa A. Coppola were all present specifically to discuss the issues we were experiencing with staff discontent.


“Mr. Murphy never stated that he believed he was being discriminated against or harassed based on his sexual orientation. Mr. Murphy's counsel never stated that Mr. Murphy believed he was being discriminated against or harassed based on his sexual orientation. No other Board members ever stated to me that Mr. Murphy had reported he was being discriminated against or harassed based on his sexual orientation. No staff or employees of Shea's ever stated to me that Mr. Murphy had reported he was being discriminated against or harassed based on his sexual orientation. No consultants or other third parties who worked with Shea's ever stated to me that Mr. Murphy reported he was being discriminated against or harassed based on his sexual orientation, including those consultants who investigated and reported on allegations raised by Shea's staff as to Mr. Murphy's management style and interpersonal interactions with staff. Shea's counsel in the period leading up to Mr. Murphy's termination, James R. Grasso, Esq., never advised the Board that Mr. Murphy had reported he was being discriminated against or harassed based on his sexual orientation. Mr. Grasso denies any such report was ever made to him. The very first time I was aware of any claim that Mr. Murphy had been discriminated against or harassed or had allegedly reported that he was being discriminated against or harassed, was after he had been terminated. Mr. Murphy's sexual orientation had absolutely zero bearing on the decision to terminate his employment. Mr. Murphy's sexual orientation or any harassment or discrimination was never brought up in any meeting of the Board or the Executive Committee wherein we discussed whether to terminate his employment. I respectfully request that the court grant the dismissal of Mr. Murphy's claims related to a discretionary bonus or his sexual orientation.”


In contrast to Murphy's complaint, the documents filed with the motions to dismiss paint a picture of a CEO who lawyered up and stopped cooperating with a board that, during the summer, became increasingly frustrated that he couldn't clean up his act. In his affidavit, attorney James Grasso describes a meeting with the Executive Committee on August 2, 2022 attended by Murphy and his attorney, to discuss the statements in the “Steinberg report,” which outlined staff complaints about Murphy’s allegedly "abrasive and aggressive" management style.


“One of the members of the Executive Committee asked Mr. Murphy if he had anything to say about the items in the Steinberg report,” Grasso recalled. “[Mr.] Murphy responded by stating ‘They're true.’ For the rest of the meeting Mr. Murphy and the Executive Committee discussed some of the particular incidents in the Steinberg report and how Mr. Murphy thought he might be able to change his workplace behavior and regain the respect and trust of Shea's other employees so as to be able to effectively lead Shea's in the future.” Never, did anyone mention Murphy’s sexual orientation as being a source of conflict of discrimination, and from this point, matters unraveled quickly, culminating with the board's decision to terminate Murphy on October 18, 2022.


Some will find irony in the fact that the board that once championed Murphy, taking his word against that the embattled staff at Shea's, is now defending itself against a litany of his allegations.


In summary, Shea's requests that the Court:

a. Dismiss that portion of Murphy’s claims in the First Cause of Action and the Fourth Cause of Action relative to a bonus;

b. Dismiss Murphy’s Second Cause of Action because there is no evidence that discrimination was a factor in his termination;

c. Dismiss Murphy’s claim of violation of Labor Law based Murphy’s own complaint and the Employment Agreement which shows him to be a highly compensated executive for whom relief is not available under Labor Law

d. Dismiss Murphy’s Fifth Cause of Action claim for defamation based on a failure to plead the specific speaker, words and manner and time of the alleged defamatory statement as required under law;

e. Dismiss Murphy’s Fifth Cause of Action claim for defamation based on: a. the alleged words being matters of protected speech even if related to a Shea’s employee; b. the allegations that such statements were made by “current and former employees” outside the course and scope of their duties as employees.

f. Dismiss Murphy’s retaliation claim because there is no evidence that Murphy made a report of discrimination or harassment and no evidence that any such report was communicated to his employer, which was the basis of his claim of retaliation; and

g. Award Shea's such other costs and fees as deemed just and proper.


Below find links to the files included in Shea's motion to dismiss.


Sheas Motion to Dismiss
.pdf
Download PDF • 94KB

Sheas Statement of Facts
.pdf
Download PDF • 261KB

Sheas James Grasso Affidavit
.pdf
Download PDF • 1.38MB

Sheas Jim Eagan Affidavit
.pdf
Download PDF • 381KB

Sheas Knoer Affidavit
.pdf
Download PDF • 381KB

Sheas James Herbert Affidavit
.pdf
Download PDF • 1.85MB

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