Sexual Harassment Lawsuit Filed Against Prominent Plaintiffs’ Lawyer

In recent years, the plaintiffs’ law firm Faruqi & Faruqi has given corporate America big headaches, filing a steady stream of shareholder lawsuits against companies related to executive pay as well as mergers and acquisitions.

Now, Faruqi & Faruqi has a headache of its own.

A former junior lawyer at the firm filed a lawsuit against the firm on Wednesday, accusing one of its most prominent partners of sexually harassment. She says in the case that the firm doing nothing to stop the inappropriate behavior.

In a lawsuit filed in Federal District Court in Manhattan, the young lawyer, Alexandra Marchuk, described in titillating and excruciating detail how the partner, Juan Monteverde, repeatedly made improper comments and unwanted sexual advances toward her. In one instance, she said, he forcibly had sex with her in the firm’s offices.

“These claims are completely without merit, brought by a disgruntled former employee,” said Lubna M. Faruqi, managing partner of Faruqi & Faruqi in a statement. “We look forward to aggressively defending our reputation in court and have every confidence we will be vindicated.”

Mr. Monteverde has made a name for himself by pioneering a relatively new type of plaintiffs’ lawsuits called “say on pay” cases. In 2010, the Dodd-Frank law gave shareholders a voice in dictating how much a company decides to pay its executives. Led by Mr. Monteverde, Faruqi & Faruqi has extracted settlements from corporations by suing them over their decisions related to executive pay. The lawsuits accuse the companies of not providing shareholders with enough information to make informed decisions about compensation issues.

Lawyers at Faruqi & Faruqi have said that these settlement benefit shareholders by making executive pay issues more transparent. But defense lawyers for corporations argue that the lawsuits provide nothing of any substance to shareholders and are the plaintiffs’ bar’s latest cottage industry. “It’s a shakedown for a ! quick buck,” Boris Feldman, a lawyer at Wilson Sonsini Goodrich & Rosati, told Reuters last November.

Mr. Monteverde has also been at the forefront of another fast-growing type of shareholders’ litigation â€" merger-related plaintiffs’ lawsuits. Today, virtually every large merger deal is followed by a barrage of lawsuits brought by shareholders that argue that the price of the takeover is too low and shortchanges shareholders. The cases are almost all settled so the merger can close, and the plaintiffs’ lawyers often walk away with lucrative fees.

Given Mr. Monteverde’s recent ubiquity on the securities class-action scene, the lawsuit filed against him ricocheted around the offices of corporate defense firms on Wednesday. Above the Law, a popular legal blog, devoted 3,400 words to the case and compared its details to “Tess of the d’Ubervilles,” the late-19th century novel about sexual mores in Victoria England.

Ms Marchuk contends that Mr. Monteverde began to sexually harass her as soon as she started at the firm as a summer intern in 2010. She said hoping his behavior during the summer was “an isolated incident,” she took a job there beginning in September 2011, earning an annual salary of $75,000.

Upon joining Faruqi & Faruqi, she learned that Mr. Monteverde has arranged for her to work for him exclusively. His misconduct resumed as soon as she started working there full-time, according to the lawsuit. She said she was afraid to report his behavior because she “had (and still has) crushing student loans, and was reluctant to be seen as overly resistant, or a troublemaker.”

The 24-page complaint highlights an incident, during Ms. Marchuk’s second week on the job, where Mr. Monteverde asked her to accompany him to Wilmington for a hearing at the Delaware Court of Chancery, the nation’s most influential business court. He said that he needed her in Delaware, according to the lawsuit, th! at the pr! esiding judge in the case, Vice Chancellor Travis Laster, was “partial to good-looking female lawyers, but Faruqi & Faruqi’s female local counsel was ugly.” Ms. Marchuk claims that Mr. Monteverde instructed her to dress alluringly for the proceeding.

She said that she eventually complained about his behavior, but the firm did nothing to address her concerns. The situation then rapidly deteriorated, according to the lawsuit, culminating in an late-night incident in the firm’s offices after its holiday party where Mr. Monteverde “quickly and forcefully had sex with her.” Mr. Marchuk said she met with an employment lawyer, and quit in December, less than four months after she started.

Ms. Marchuk now lives in Omaha, where she is working in a legal position at an insurance company. The lawsuit, which was filed by Ms. Marchuk’s lawyer, Harry Lipman of Rottenberg Lipman Rich, seeks compensation of $2 million, along with punitive damages.