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The Zara $40 million hostile work environment lawsuit allegations

On June 3, 2015, the former General Counsel at Zara USA filed a lawsuit against Zara USA and Zara executives Dilip Patel and Moises Costas Rodriguez.

Ian Jack Miller, who is gay and Jewish, claims that he was subjected to a hostile work environment, pay discrimination, retaliation, and unlawful discharge based on his religion, sexual orientation, and national origin.

The following are the allegations that Miller made in his lawsuit complaint:

A. Mr. Miller’s Exemplary Performance

17. Mr. Miller earned his Bachelor of Arts degree from McGill University in 1987. He earned two law degrees, in English Common Law and French Civil Law, from McGill University in 1991. He earned his Master’s in Business Administration degree from Baruch College of the City University of New York in 1999. He is admitted to practice law in New York State.

i. Mr. Miller’s Responsibilities as General Counsel

18. Mr. Miller worked as the Company’s General Counsel from January 2008 until March 2015, serving as the Company’s first and only in-house attorney throughout the United States and Canada. As Zara’s General Counsel, Mr. Miller built the legal department from its inception; hired and supervised paralegals; provided prompt and clear advice on legal issues; and cultivated relationships with outside counsel representing Zara’s landlords and competitors.

19. In his capacity as Zara’s General Counsel, Mr. Miller routinely handled litigation, investigation, mediation, and settlement of claims brought against the Company, including claims involving personal injury, product liability, labor and employment, intellectual property, and the Company’s marketing practices. Mr. Miller skillfully handled multimillion dollar real estate transactions, including two unprecedented real estate acquisitions worth in excess of $300 million each. As Zara’s General Counsel, Mr. Miller regularly communicated with in-house lawyers, tax specialists, and executives at Inditex Group’s headquarters in Spain and in its offices in other countries regarding a wide array of legal issues, including but not limited to vendor contracts, e-commerce terms and conditions, customs audits, and tax matters. In connection with his work as Zara’s General Counsel, Mr. Miller traveled around the world, including to La Caruna, Madrid, and Barcelona in Spain; Toronto, Vancouver, and Montreal in Canada; and Puerto Rico, San Francisco, Los Angeles, Phoenix, and Fort Lauderdale in the United States.

ii. Mr. Miller’s Strong Performance

20. Mr. Miller was a strong performer. In his annual performance reviews, he consistently achieved his performance objectives, including the expectation that he promptly handle 90% of real estate agreements for premises located in the United States and Canada. For example, in 2014, Mr. Miller earned 110% of his target bonus due to his superior performance.

21. Mr. Miller achieved marked success in real estate, managing the legal requirements of two $300 million real estate acquisitions that were unprecedented in Zara’s history and achieved significant media recognition. In 2013, Mr. Miller oversaw the Company’s purchase of its store at 666 Fifth Avenue in New York City for $324 million, a record deal for a retail property in the United States. In January 2015, less than two months before the Company’s discriminatory and retaliatory termination, Mr. Miller handled the $300 million purchase of Zara’s new flagship store located at 503 Broadway in New York City.

B. Zara Created a Hostile Work Environment for Mr. Miller as a Gay Employee

22. The senior executives in Zara’s New York offices cultivated a hostile working environment for Mr. Miller as a gay employee. Mr. Miller was subjected to homophobic messages and an environment contemptuous of sexual minorities. Among the chief culprits were Defendant Moises Costas Rodriguez, who was Zara’s former C.E.O. and is currently Zara’s Director of Expansion for North and South America, and Defendant Dilip Patel, who is currently Zara’s Country Manager.

23. Defendant Costas harassed Mr. Miller with unwelcome messages concerning Mr. Miller’s sexual orientation, targeting Mr. Miller and prying into his personal life because Mr. Miller is gay. For example, Defendant Costas sent Mr. Miller an email highlighting language that marriage is an institution “sanctified between a man and a woman.” In another instance, Defendant Costas sent Mr. Miller an email drawing his attention to a “gay sex scene” in a video game. Defendant Costas also sent Mr. Miller an email with a photo depicting a shirtless man. In yet another instance, Defendant Costas sent Mr. Miller a news article about the marriage of gay fashion designer Isaac Mizrahi and instructed Mr. Miller to “put a ring on it.”

24. In his in-person interactions with Mr. Miller, Defendant Costas aggressively promoted heterosexuality as the Company’s preferred sexual orientation, signaling Mr. Miller’s status as an outsider at Zara. Defendant Costas bragged to Mr. Miller that he had sexual relations with at least five different female subordinates, including a Director of Human Resources. Defendant Costas also frequently bragged to Mr. Miller about the size of his penis.

25. Defendant Patel, Zara’s current Country Manager, likewise promoted heterosexuality as the Company’s preferred sexual orientation. Defendant Patel spoke with senior executives about prostitutes, openly criticized transgendered individuals, and demeaned gender non-conformism. For example, at a business dinner in Las Vegas with other senior executives in May 2014, Defendant Patel ridiculed a store manager in London for having had sex with transsexuals on a trip to Bangkok, Thailand.

26. Defendant Patel has a strong personal connection to the Company’s founder Amancio Ortega. Indeed, Mr. Patel was one of only a handful of employees from Inditex Group’s entire global workforce (which consists of over 137,000 employees worldwide) whom Mr. Ortega invited to attend the wedding of Mr. Ortega’s daughter. As a result of this personal connection, Defendant Patel engaged in discriminatory and harassing conduct with impunity.

27. Like Defendant Costas and Defendant Patel, Inigo de Llano, Zara’s former Country Manager, openly discussed how Company executives visited prostitutes during business trips, commentary that reinforced heterosexuality as the preferred sexual orientation among Zara’s senior executives.

28. Francesc Fernandez Claramunt (“Francesc Fernandez” or “Mr. Fernandez”), another of Zara’s most senior employees, also targeted Mr. Miller and created a hostile work environment. For example, Mr. Fernandez used his official Zara email account to send a graphic pornographic image of an erect and tattooed penis to Mr. Miller’s partner, Michael Mayberry. Mr. Fernandez stated to Mr. Mayberry that Mr. Fernandez had been “trying to convince” Mr. Miller to
get such a tattoo.

29. Zara took no action to discourage the homophobic behaviors of its senior executives. Rather, Zara allowed these executives to participate in and perpetuate a hostile environment with impunity.

C. Zara’s Anti-Semitic Religious Discrimination Against Mr. Miller

30. Mr. Miller is Jewish. He was raised in a religiously observant, kosher home; went to Jewish summer camps as a child; lived on a kibbutz as a teenager; went to university in Israel as an adult; and has attended synagogues during his adult life.

31. As General Counsel at Zara, Mr. Miller was the only Jewish in-house attorney for all of Inditex Group, and for most of Mr. Miller’s tenure at the Company, he was the sole Jewish employee at Zara’s corporate headquarters in New York.

i. The Company’s Anti-Semitic Environment

32. For his first five years at the Company, however, Mr. Miller never discussed his Jewish identity because anti-Semitism was commonplace at Zara. In fact, for years it was a regular occurrence for high-ranking executives to disparage Jews in Mr. Miller’s presence.

33. A primary offender was Ramon Renon Tunez, who is Zara’s Chief Executive Officer and Inditex Group’s Director of International Expansion, as well as a longtime adviser and close friend of Amancio Ortega. Mr. Renon and Defendant Costas would openly deride Jewish landlords and the Jewish real estate developers they interacted with as “los judios” (Spanish for “the Jews”). Before and after meetings with these Jewish colleagues, Defendant Costas would roll his eyes while reciting the phrase “los judios” and complain about how difficult it was to negotiate with “those people.”

ii. The Company Discovers That Mr. Miller Is Jewish and Targets Him

34. In or about May 2013, executives at the Company learned that Mr. Miller was Jewish. Mr. Miller’s new paralegal, Will Klein, who is also Jewish, revealed Mr. Miller’s Jewish identity to Defendant Costas and Mr. Fernandez during a lunch. Defendant Costas and Mr. Fernandez expressed shock to learn about Mr. Miller’s Jewish heritage.

35. Following the revelation of Mr. Miller’s Jewish identity, high-ranking officials at Zara began targeting Mr. Miller and prying into his personal life.

36. The first business day after the revelation that Mr. Miller is Jewish, Mr. Fernandez confronted Mr. Miller, probing him about why he had not shared this important information before and stating that he wanted to further discuss the issue. Shortly thereafter, Defendant Costas, who had never previously discussed religion with Mr. Miller, commented to Mr. Miller about the distinction between being a “religious person” and being from a particular religion. Mr. Miller remained uncomfortable speaking about his religious background with his colleagues in light of their derogatory remarks about Jews and their sudden and unprompted inquiries concerning Mr. Miller’s own religious beliefs.

37. Gossip about Mr. Miller’s Jewish identity soon spread throughout the Zara’s New York office and to Inditex Group’s headquarters in Spain. Individuals who had not been present at the lunch where Mr. Miller’s Jewish identity was revealed suddenly began examining Mr. Miller about his Judaism. Defendant Patel, for example, began addressing Mr. Miller using Yiddish words, like “oy” and “schlep.” Ms. Paula Figueira, Zara’s Operations Director, also made comments to Mr. Miller about being Jewish, although he had never discussed his Judaism with her. Defendant Costas spread the word about Mr. Miller’s Jewish background to Javier Monteoliva Diaz (“Javier Monteoliva” or “Mr. Monteoliva”), Head of the Legal Department for Inditex Group, by including him in an email to Mr. Miller referencing his Jewish background. These comments and actions made Mr. Miller uncomfortable because he knew that high-level executives were discussing his Jewish identity behind his back.

38. Despite the quickly spreading news of Mr. Miller’s Jewish background, senior executives continued to make negative comments about Jews in his presence.

39. For instance, in or about June 2014, Mr. Fernandez singled Mr. Miller out as “different” because he was Jewish.

40. Similarly, Mr. Miller observed Mr. Fernandez speak disparagingly of Jews in Mr. Miller’s presence. In one conversation, Mr. Miller’s Jewish paralegal, Mr. Klein, told Mr. Fernandez and Mr. Miller that he had been treated poorly by certain students at his university because he was Jewish. Mr. Fernandez responded in a matter of fact manner that, of course, Mr. Klein was treated differently because Jews are outsiders.

41. In or about July 2013, Mr. Miller traveled to Israel on vacation with the express, advanced approval of Javier Monteoliva, Head of the Legal Department for Inditex Group. Mr. Miller offered to make himself available via telephone to work to the extent necessary. Defendant Patel responded aggressively, however, and demanded that Mr. Miller check his email every hour during his trip.

42. During Mr. Miller’s employment at Zara, he also observed the Company’s aversion to hiring recognizably Jewish candidates. Mr. Klein, for instance, began his work as a temporary employee. Despite Mr. Klein’s excellent performance and Mr. Miller’s recommendation that Zara hire him permanently, Zara strongly resisted Mr. Klein on a permanent basis.

43. Similarly, after the Company terminated Mr. Miller, it received applications for the General Counsel position from qualified candidates with names that are recognizably Jewish. Upon information and belief, the recognizably Jewish candidates never received interviews despite having applied for and being qualified for the position.

D. Zara’s Discrimination Against Mr. Miller as an American Employee

44. As a wholly-owned subsidiary of the Inditex Group, of one of Spain’s largest corporations, Zara demonstrates a preference for hiring employees from Spain and offers Spanish employees greater advancement opportunities than American employees.

45. The vast majority of the senior executives at Zara and at Inditex Group are Spanish, including Defendant Costas, Mr. Renon, and Mr. Fernandez.

46. Spanish employees are subject to relaxed performance expectations compared to their American counterparts. Indeed, Defendant Costas specifically told Mr. Miller that Spanish employees “get more chances” than non-Spanish employees at Zara.

47. Moreover, upon information and belief, Spanish employees are paid more than similarly-situated American employees. For example, in 2014, Mr. Fernandez, who has less education and experience at the Company than Mr. Miller but is Spanish, received a 37% raise after he expanded the number of Zara’s retail leases; by contrast, Mr. Miller, who handled the legal requirements of every one of those retail leases, only received a 3% increase in his salary.

E. Zara’s Retaliation Against Mr. Miller Under New York Labor Law

48. In or about March and April 2013, Mr. Miller provided advice to Zara on legal questions related to the Company’s compliance with the New York Labor Law. In response, Zara retaliated against Mr. Miller.

F. Zara’s Escalating Discrimination and Retaliation Against Mr. Miller

49. During Mr. Miller’s final two years with the Company, especially following the Company’s discovery that Mr. Miller was Jewish, Zara’s campaign of discrimination escalated, and the Company also retaliated against Mr. Miller for raising issues related to the Company’s compliance with New York Labor Law. The Company reduced Mr. Miller’s job responsibilities, reduced his pay, and terminated him for discriminatory and retaliatory reasons.

i. Country Manager Dilip Patel Reduced Mr. Miller’s Job Responsibilities and Interfered with His Ability to Perform His Job

50. Beginning in or about May 2013, after senior executives learned that Mr. Miller was Jewish and after Mr. Miller provided advice regarding the Company’s compliance with the New York Labor Law, Zara’s Country Manager, Defendant Dilip Patel, began a campaign to minimize Mr. Miller’s role as Zara’s General Counsel.

51. Defendant Patel began excluding Mr. Miller from meetings that fell within the scope of his job duties. Defendant Patel also allowed Mr. Miller’s department to remain understaffed, despite expanding all other corporate departments in Zara’s corporate headquarters and despite Mr. Miller’s repeated requests to expand the Legal Department.

52. Defendant Patel ceased almost all in-person communications with Mr. Miller and restricted Mr. Miller’s receipt of office-related emails. Defendant Patel’s habit of ranking employees in his email distribution lists evidenced his worsening treatment of Mr. Miller. Mr. Miller quickly fell from the second person to the bottom of Defendant Patel’s email chains. Ultimately, Defendant Patel removed Mr. Miller entirely from Department Head emails and replaced him with a paralegal.

53. Defendant Patel also impeded Mr. Miller’s management of the Company’s legal affairs. For example, in October 2014, Defendant Patel attempted to prevent Mr. Miller from attending the annual law conference for the International Council of Shopping Centers, the most important conference for lawyers working in retail real estate.

54. In November 2014, Defendant Patel prevented Mr. Miller from attending Inditex Group’s annual meeting for its global legal team. Mr. Miller was originally invited to the meeting by Javier Monteoliva, Head of the Legal Department for Inditex Group. Mr. Miller had customarily attended the meeting during his first six years at the Company and had been expected to make a presentation at the 2014 annual meeting. However, upon learning that Mr. Miller had been invited, Defendant Patel intervened and forced Mr. Monteoliva to revoke Mr. Miller’s invitation. Seventy lawyers and their legal staff were invited from around the globe, and Mr. Miller was the only in-house attorney prevented from attending.

55. Similarly, in January 2015, Defendant Patel forced Mr. Miller to cut short a business trip to Puerto Rico concerning ongoing litigation. As a result of the abbreviated trip, Mr. Miller was unable to conduct business meetings he had planned.

56. Defendant Patel even interfered with Mr. Miller’s ability to hire subordinate employees. Specifically, in November 2014, Mr. Miller requested that Zara hire a permanent paralegal. After Mr. Miller made this request, Defendant Patel hired a temporary paralegal without ever consulting Mr. Miller. Similarly, in January 2015, Defendant Patel excluded Mr. Miller from part of the process of selecting an additional paralegal for Zara’s Legal Department. By contrast, when the Real Estate Expansion team sought hires for a newly created position, the Company promptly hired the team’s recommended candidate.

57. Accordingly, by January 2015, after Zara had discovered Mr. Miller was Jewish in or about May 2013 and after Mr. Miller had provided advice regarding the Company’s compliance with the New York Labor Law in or about March and April 2013, Defendant Patel had marginalized Mr. Miller, interfered with Mr. Miller’s duties as General Counsel, and had isolated him from his colleagues around the globe.

ii. Pay Discrimination Against Mr. Miller

58. As part of its campaign of discrimination and retaliation, Zara markedly reduced the rate of increase to Mr. Miller’s base and variable salaries after senior executives learned that Mr. Miller was Jewish and after Mr. Miller provided advice regarding the Company’s compliance with the New York Labor Law.

59. Prior to these events, Zara increased Mr. Miller’s base salary at an average rate of 5.7% per year from 2011 to 2013, including a 7.07% increase in 2013. After these events, however, the increases to Mr. Miller’s base salary suddenly dropped to only 3% per year in 2014 and 2015.

60. Prior to these events, Zara increased Mr. Miller’s variable salary at an average rate of 15.2% per year from 2011 to 2013, including a 22.49% increase in 2013. After these events, however, the increases to Mr. Miller’s variable salary suddenly dropped to only 3% per year in 2014 and 2015.

61. There were no performance-based explanations for the reduced increases to Mr. Miller’s base salary and annual bonuses. Indeed, Mr. Miller remained a strong performer and oversaw the two largest real estate deals in Zara’s history. Upon information and belief, the Company awarded a 37% increase in base salary to Mr. Miller’s colleague, Francesc Fernandez, after he expanded the number of Zara’s retail leases; by contrast, Mr. Miller, who handled the legal requirements of every one of those retail leases, only received a 3% increase in his salary.

iii. Discriminatory and Retaliatory Termination

62. Beginning in or about January 2014, Mr. Miller complained on multiple occasions to Inditex Group’s highest-ranking legal officer, Javier Monteoliva, that Mr. Miller was being subjected to harassment and discrimination. Despite these repeated complaints, neither Zara nor Inditex Group took any action to rectify the illegal treatment to which Mr. Miller was being subjected, and the harassment and discrimination continued unabated.

63. Zara’s campaign of discrimination and retaliation against Mr. Miller culminated in the Company’s termination of Mr. Miller’s employment in March 2015.

64. On March 2, 2015 – just less than two months after Mr. Miller closed a $300 million real estate acquisition for Zara – Mr. Monteoliva called Mr. Miller and communicated to him that his continued employment at the Company was in jeopardy. Mr. Monteoliva provided no performance-based explanation for the situation and in fact admitted multiple times that the Company’s treatment of Mr. Miller was “unfair.” In explaining the situation, Mr. Monteoliva stressed the role of the Company’s founder, Amancio Ortega, stating that Defendant Patel has a closer relationship with Mr. Ortega than Mr. Monteoliva does.

65. In light of the pattern of harassment, discrimination, and retaliation Mr. Miller had experienced, Mr. Miller recognized it was necessary to retain legal counsel in advance of the meeting.

66. On March 4, 2015, Mr. Miller’s counsel sent a letter that notified the Company of Mr. Miller’s claims of unlawful discrimination based on Mr. Miller’s religion, national origin, and sexual orientation, and expressed interest in reaching an amicable resolution.

67. On March 5, 2015 – just one day after receiving that letter – the Company unceremoniously terminated Mr. Miller. The Company expressed no willingness to provide Mr. Miller with a severance or a transitional period to seek other employment or to otherwise negotiate the terms of his future with the Company.

G. Mr. Miller’s Emotional Distress and Reputational Harm

68. Mr. Miller has suffered severe emotional distress as a result of the hostile work environment he endured throughout the course of his employment with Zara. During his last two years at the Company, Mr. Miller notified his physician of the stress and anxiety he was suffering because of his work environment and was prescribed medication to help him cope.

69. Mr. Miller has also suffered severe emotional distress and severe reputational harm because of the Company’s discriminatory and retaliatory termination of his employment. Mr. Miller built his reputation working for the largest fashion retailer in the world as its sole attorney in the United States and Canada. Mr. Miller’s peers associated him with Zara and admired him for his success at the Company. Zara’s termination of Mr. Miller has embarrassed him and tarnished his well-earned reputation, including among the numerous colleagues in the legal community who have expressed shock and disbelief about his separation from Zara.

70. While Mr. Miller is diligently seeking a new job, the circumstances of the Company’s termination of him significantly limit his ability to find a replacement position. Furthermore, Zara’s influence among fashion retailers and among real estate companies limits Mr. Miller’s ability to find a job in the same field, since potential employers do not want to risk a conflict with Zara by hiring an employee whom the Company terminated.

This is a report on a civil lawsuit filed at the U.S. District Court. The details in this report come from an original complaint filed by a plaintiff. Please note that a complaint represents an accusation by a private individual, not the government. It is not an indication of guilt, and it represents only one side of the story.

The Zara $40 million hostile work environment lawsuit allegations
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