2014.04.02 Phills v. Stanford Complaint

1 Andrew F. Pierce (State Bar No.
101889)
PIERCE & SHEARER LLP
2 2200 Geng Road, Suite 230
Palo Alto, CA 94303
3 Phone: (650) 843-1900
Fax: (650) 843-1999
4
5 Attorneys for Plaintiff
JAMES A. PHILLS, JR.
6
7
8 SUPERIOR COURT OF CALIFORNIA
9 COUNTY OF SANTA CLARA
10 UNLIMITED JURISDICTION
11 JAMES A. PHILLS, JR., Case No.
12 Plaintiff, COMPLAINT
13 v.
2200 Geng Road, Suite 230, Palo Alto, CA 94303
PHONE (650) 843-1900 FAX (650) 843-1999
14 THE BOARD OF TRUSTEES OF THE

LELAND STANFORD JUNIOR
15 UNIVERSITY; GARTH SALONER; and
DOES 1 through 25,
16
Defendants.
17
18 PARTIES
19 1. Plaintiff James A. Phills, Jr. (Phills) is an individual who is employed as a
20 Professor at Stanford Graduate School of Business.
21 2. Defendant The Board of Trustees of the Leland Stanford Junior University
22 (hereinafter Stanford, University or Defendant) is a corporate trust organized under the
23 laws of the State of California.
24 3. Defendant Garth Saloner, is an individual and Dean of the Stanford University
25 Graduate School of Business (hereinafter GSB).
26 4. Plaintiff is ignorant of the true names and capacities, whether individual,
27 corporate or otherwise, of the defendants sued herein as Does 1-25, inclusive, and therefore
28 sues these defendants by such fictitious names. Plaintiff is informed and believes and thereon
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1 alleges that each of these fictitiously named defendants is responsible in some manner for the
2 occurrences herein alleged, and that Plaintiffs injuries as herein alleged were proximately
3 caused by the conduct of the aforementioned defendants. Plaintiff is informed and believes,
4 and therefore alleges, that at all relevant times each of the defendants was the agent and/or
5 principal of the other and acted within the scope of such agency or employment. Plaintiff is
6 informed and believes and thereon alleges that each and every wrongful act by defendants
7 complained of herein was done with the approval, express or implied, of each of the other
8 defendants, and each defendant has ratified and approved the acts and omissions of each of
9 the others.
10 INTRODUCTION
11 5. Plaintiff, Professor James A. Phills, Jr. is a faculty member at the Graduate
12 School of Business (GSB) at Stanford University, where he has taught since 2000. This
13 case concerns discrimination against Phills, in the form of adverse employment decisions as
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14 well as harassment of Plaintiff by his supervisor, Garth Saloner (Saloner) the Dean of the
15 GSB. These actions arose from Saloners clandestine sexual relationship with Phills
16 estranged wife, Professor Deborah Gruenfeld (Gruenfeld), also a faculty member at the
17 GSB who is supervised by Saloner. Phills was and continues to be subjected to
18 discriminatory actions with respect to his compensation, work assignments, and benefits
19 based on his marital status, race, and gender. In addition, Phills has been subjected to a hostile
20 workplace and ongoing retaliation by Saloner, Saloners deputies, Professor Gruenfeld, and
21 Stanford Provost, John Etchemendy after he complained about discrimination and sexual
22 harassment. He has been maligned and marginalized in his place of work and community
23 through various actions taken by Saloner to harm Phills financially and emotionally, and
24 advance Gruenfelds interests in their divorce proceedings.
25 6. Dean Saloner had a clear conflict of interest in employment decisions about
26 Phills (and Gruenfeld). In addition, Stanford University has an explicit policy on consensual
27 romantic and sexual relationships between supervisors and subordinates that requires
28 notification and recusal (see Exhibit A). Despite this requirement, either Dean Saloner failed
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1 to disclose this conflict of interest or University Provost John Etchemendy explicitly
2 sanctioned the Deans relationship with Professor Gruenfeld, its concealment, Dean Saloners
3 ongoing exercise of supervisory authority over Phills, thereby failing to take the requisite
4 actions to protect Plaintiff from Saloners discriminatory and malicious conduct. Provost
5 Etchemendy himself also engaged in harassment and intimidation of Phills. Other senior
6 university officials, including the Stanford Department of Public Safety endeavored to
7 conceal evidence of Saloners misconduct and retaliatory actions.
8 FACTUAL BACKGROUND
9 A. PHILLS AND HIS WIFE ARE RECRUITED TO STANFORD AND
RECEIVE HOME LOANS THAT ARE NOT DUE UNTIL SALE OR
10 DEPARTURE FROM STANFORD
11 7. Phills is Professor of Organizational Behavior (Teaching) at the GSB. In 2000,
12 Stanford recruited Professor Phills from the Yale School of Management. Between 2001 and
13 2009, Professor Phills served as the Faculty Director and Claude N. Rosenberg Jr. Director of
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14 the Center for Social Innovation (CSI). During this time, Professor Phills was instrumental
15 in building CSI into the worlds leading academic center in the areas of social change,
16 innovation, and entrepreneurship, as reflected in the GSBs number one ranking in 2005 and
17 2007 by the Aspen Institute. Phills also co-founded and served as Academic Editor of the
18 award winning Stanford Social Innovation Review, which was ranked as the most influential
19 publication in the social sector. Beginning in 2001, he developed and designed the
20 curriculum, and, as faculty director, led six of the GSBs most highly rated and acclaimed
21 executive education programs. These included the Executive Program for Nonprofit Leaders
22 (EPNL); the Executive Program for Nonprofit Leaders in the Arts (EPNL-Arts); the
23 Executive Program for Educational Leaders (EPEL), and the Executive Program for
24 Philanthropy Leaders (EPPL), the Executive Program in Social Entrepreneurship (EPSE), and
25 Strategy for Nonprofit Organizations (SNO). Professor Phills has been recognized a number
26 of times as one of the top-rated teachers in the core of the MBA curriculum, as part of the
27 Academic Recognition Dinner, an event honoring faculty receiving the strongest student
28 evaluations. During his fourteen years on the Stanford faculty Phills has taught eight
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1 different courses. In 2003, Professor Phills was appointed Associate Professor (Teaching),
2 which resulted in his becoming a member of Stanfords Academic Council. In 2007, he was
3 promoted to the rank of Professor (Teaching) and granted a continuing appointment.
4 8. At the time of his recruitment by Stanford, Plaintiff had recently married
5 Deborah H. Gruenfeld, an Associate Professor at Northwestern University, who was also
6 being recruited by the GSB. As part of their initial employment benefits, Stanford loaned
7 Gruenfeld and Phills jointly $209,800 as part of its Faculty Staff Housing Programs. This
8 loan was to be used solely to purchase a new principal place of residence. The promissory
9 note, dated August 2, 2000, states that the Borrower, defined as Gruenfeld and Phills, would
10 pay no interest or principal until the Due Date, which was defined, in relevant part, as the date
11 the property was sold or otherwise transferred, or the date the residence ceased to be the
12 principal residence of an Eligible Person. Professor Phills is currently an Eligible Person, and
13 will continue be one as long as he retains his current appointment at the GSB, because
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14 pursuant to the Notes definitions, all members of the Academic Council are defined as
15 Eligible Persons. A copy of the Note is attached hereto as Exhibit B.
16 9. In 2005, Phills and Gruenfeld borrowed an additional $790,200 from Stanford
17 through its faculty staff housing program and used the loan proceeds to finance the
18 construction of a new house on their existing homesite on the Stanford campus. They resided
19 there with their two children until Gruenfeld moved out, by her own choice, in June 2012.
20 10. One promissory note, dated April 7, 2005 for $750,000, states that the
21 Borrower, defined as Gruenfeld and Phills, would pay no interest or principal until the Due
22 Date, which was defined, in relevant part, as the date the property was sold or otherwise
23 transferred, or the date the residence ceased to be the principal residence of an Eligible
24 Person. Professor Phills is currently an Eligible Person based on the Universitys definition.
25 11. The second promissory note, also dated April 7, 2005 for $40,200, states that
26 the Borrower, defined as Gruenfeld and Phills, would pay no interest or principal until the
27 Due Date, which was defined, in relevant part, as the date the property was sold or otherwise
28 transferred, or the date the residence ceased to be the principal residence of an Eligible
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1 Person. In 2005, Professor Phills was, and continues to be, an Eligible Person pursuant to the
2 Notes definitions, as all members of the Academic Council are defined as Eligible Persons.
3 A copy of the Note is attached hereto as Exhibit C.
4 B. GRUENFELD LEAVES PHILLS AND BEGINS A CLANDESTINE
RELATIONSHIP WITH THEIR MUTUAL SUPERVISOR DEAN
5 SALONER
6 12. At the beginning of June 2012, Phills and Gruenfeld separated, when
7 Gruenfeld moved out of their residence. Within a month of this separation, defendant Saloner
8 (who was and is both Phills and Gruenfelds supervisor) began to pursue and subsequently
9 consummated a clandestine romantic and sexual relationship with Professor Phills wife,
10 Professor Gruenfeld. Saloners romantic interest in Professor Gruenfeld dated back to
11 approximately 2008 or 2009, and an incident between Saloner and Gruenfeld in her office,
12 which she subsequently confessed to her husband Phills. This relationship continues,
13 although no longer clandestine, through the present. During the year prior to Phills and
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14 Gruenfelds separation, Saloner was privy to the intimate details of couples marital
15 difficulties as a result of information shared with him by his niece, Stacy Kertsman, who was
16 a close friend of Gruenfeld.
17 C. THE CAMPAIGN OF HARASSMENT AND RETALIATION AGAINST
PHILLS
18
19 13. On May 1, 2012, Professor Phills began an unpaid leave of absence from the
20 University. Despite being on leave, without compensation, he continued to teach his Spring
21 Quarter courses that continued into June, fulfilling his regular teaching commitments. In the
22 Fall Quarter of 2012, he also fulfilled his full regular teaching assignment also without any
23 compensation from Stanford. In April 2012, the GSB Deans office had informed him that,
24 based on University limits on allowable leave, as of December 1, 2012, he would either have
25 to return to his position on a full-time basis or resign his faculty appointment.
26 14. In October and November of 2012, while trying to clarify and determine his
27 future at the GSB, Professor Phills was informed of several adverse decisions regarding the
28 terms and conditions of his employment at Stanford by Senior Associate Dean, Madhav
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1 Rajan, who reports directly to Dean Saloner. The most significant of these was the GSB
2 Deans Offices decision to call (i.e., demand repayment of) $250,000 of the home loans, the
3 portion of the outstanding Stanford mortgages that they controlled, made to Professor Phills
4 and Professor Gruenfeld on the basis that she had moved out. At the time of these decisions,
5 Rajan had not been told of the relationship between his supervisor, Saloner, and Professor
6 Gruenfeld. Professor Phills was informed that the GSB Deans office expected repayment of
7 this loan in the amount of $250,000 by August 31, 2013. The Deans office further indicated
8 that they were willing to extend this loan to Professor Gruenfeld, but were unwilling to do so
9 for Professor Phills. They offered no explanation or justification for this decision at the time.
10 The Deans office also advised Professor Phills, It would be cleanest if you jointly sold the
11 house, advocating an outcome that advanced Professor Gruenfeld and Dean Saloners desire
12 to force Phills out of the GSB and out of his house on campus before their affair became
13 public. In addition, Professor Phills was removed as the director of two of the executive
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14 education programs that he had designed and led for many years. The Deans office did not
15 explain, or even accord Professor Phills the courtesy of, informing him of these decisions.
16 Subsequently, Professor Phills was not even invited to teach in the very programs that he had
17 created, even though these programs used teaching materials and a textbook that he had
18 authored. Moreover, the faculty directors who replaced Phills were far less qualified, having
19 virtually no experience in directing such programs. These decisions gratuitously and
20 capriciously deprived Professor Phills not only of meaningful professional activities, but also
21 of supplemental income, substantially reducing his total compensation.
22 15. The Deans office refused Plaintiffs request to assure him of a minimum
23 number of executive education sessions and claimed falsely that no such practice existed.
24 Rajan later admitted that such a practice did exist but suggested it was not applicable.
25 16. At the time of these decisions, Dean Saloner was actively engaged in (or the
26 pursuit of) a romantic relationship with Plaintiffs wife, Professor Gruenfeld and, therefore,
27 was in an unavoidable conflict of interest. These decisions inured to the benefit of Dean
28 Saloners paramour, Professor Gruenfeld, as the premature calling in of these loans in
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1 conjunction with other steps set forth above would have been to her advantage in her
2 contested dissolution proceedings with Phills. These actions reduced Professor Phills total
3 income, which would also work towards forcing Professor Phills to sell the family home,
4 allowing Saloner to pursue his affair with Plaintiffs wife free from the constant reminder of
5 the origin of their illicit affair created by Professor Phills ongoing presence.
6 17. During October and November of 2012, Saloner also learned confidential
7 information about Professor Phills negotiations and also advised her on matters related to the
8 terms of the couples divorce, including advising her to renege on her agreement to freeze her
9 equity in the couples Stanford residence in exchange for Watts-Epstein credit and Phills
10 assuming all responsibility for paying the mortgage taxes and insurance on the house. Saloner
11 also advised and encouraged Gruenfeld to use threats of custody battle to gain leverage in the
12 divorce negotiations while the coupe were in mediation.
13 18. From 2010 through September of 2012, Professor Gruenfeld was the
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14 University-designated faculty member who served as the Sexual Harassment Advisor for the
15 GSB. University officials serving in this capacity are given special training in recognizing
16 and handling sexual harassment and consensual romantic relationships. She and Dean
17 Saloner were the two primary individuals at the GSB to whom a complaint of sexual
18 harassment would ordinarily have been directed by the Plaintiff, further highlighting the
19 conflict of interest stemming from the inappropriate relationship.
20 19. On October 28, 2012, having learned of the relationship between Gruenfeld
21 and Saloner, Phills wrote by email to Stanford Provost, John Etchemendy, requesting a 30-
22 minute meeting to talk confidentially about some very sensitive personal issues that
23 involved the Deans office at the GSB and so I cant raise this at the school level.
24 20. The Provost failed to disclose or to direct Dean Saloner to disclose his
25 relationship with Plaintiffs wife to Plaintiff, despite the fact that it was material and
26 consequential for his decision about whether he wanted to, or could return to Stanford without
27 fear of reprisal or ongoing hostility and animosity.
28
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1 21. Provost Etchemendy, tacitly or explicitly sanctioned Saloners ongoing
2 relationship with his subordinate and the wife of Professor Phills, and permitted him to
3 continue to participate in, and/or make, decisions about the terms and conditions of his
4 employment, as evidenced by subsequent communications.
5 22. On November 1, 2013, Phills, concerned about the harm to his wifes, the
6 Deans and his own reputation that might result from revealing the affair, wrote to Provost
7 Etchemendy again by email to cancel the proposed meeting. By way of explanation, he
8 informed the Provost that he was in the process of separating from his wife and that their
9 house on campus had:
10 become a point of contention, partly from financial reasons but largely
because of my desire to keep our two children in their home. Obviously, the
11 options here are inextricably linked to my decision about whether to return to
Stanford at the expiration of my leave my absence at end of November.
12
13 23. On November 4, 2012, Senior Associate Dean Madhav Rajan sent an email to
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14 Phills and Gruenfeld announcing Stanfords position that it would be cleanest if you jointly
15 sold the house, because then everything could start over. If Jim wants to keep the house, he
16 would have to refinance it and pay Deb back so she could pay Stanford back for the
17 exceptional loans. Phills wrote back noting that, the key thing here is that Im expecting
18 that the loan amounts and the terms would remain the same. Phills further stated that, with
19 respect to refinancing the house I would need to know that re-fi terms would remain the same
20 as they are currently. Also since I think Im already a co-borrower on the Stanford notes, Im
21 not sure why it would be a re-fi as opposed to a novation.
22 24. Rajan replied on November 5, 2012 at 6:25 p.m., claiming, there is no leeway
23 at all in postponing the decision regarding your employment. The Stanford rule regarding the
24 maximum amount of leave permitted for any faculty member will be triggered on November
25 30. Independent of your choices about the house, you will have to make a call regarding
26 where you wish to work by that time On November 5, 2013, Rajan also sent an email to
27 Phills stating that you have to set up an arrangement whereby Deb is able to repay the
28 exceptional loan she was granted.
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1 25. On November 7, 2012, Phills called the Stanford Housing Office and was told
2 that he and Gruenfeld had received two exceptional loans supplementing the ordinary
3 program that allowed the loans of up to $750,000. Phills informed Rajan by email on
4 November 7, that for me to refinance it seems that I would need to be granted or
5 transferred the same GSB supplemental amounts to get the total loan amount up to the same
6 level. My understanding from them is that this would have to be approved by the GSB.
7 Phills inquired whether the GSB would grant him the supplemental exceptions. In another
8 email on November 7, 2012, Phills again asked Rajan about the GSB decision on removing or
9 transferring the so-called exceptional loans.
10 26. On November 8, 2012, Rajan replied, as for the housing exception, I am
11 afraid this is not going to be possible. I have now spoken to the other SADs, to Claudia and
12 to Garth [Defendant Garth Saloner, the Dean of the GSB and Rajans supervisor] ... The
13 Deans office is not willing to petition the University for an exception to the standard Stanford
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14 housing program.
15 27. Despite an obvious conflict of interest, Dean Saloner participated in the
16 decision to deny Professor Phills continuation of the existing GSB housing loans that were
17 already in place, and, moreover, to demand that he repay these loans by August of 2013.
18 28. On November 13, 2012, Phills again emailed Rajan requesting the GSBs
19 expectation regarding the timing of repayment or the calling of the exceptional loans as he
20 had been informed that was determined by the GSB.
21 29. On November 15, 2012, Rajan informed Phills that the GSB would like the
22 repayment to happen by next summer, in particular August 31, 2013. In an email reply that
23 day sent at 5:39 p.m., Phills inquired as to whether this was standard policy or a decision
24 specific to his situation. In an email sent on November 15th at 9:30 p.m., Rajan admitted that
25 at the school level, decisions on housing are done on a one-off basis (i.e., there is no standard
26 policy).
27 30. Phills, confused by this turn of events, emailed Barbara Klein of the Stanford
28 Housing Office on November 13, 2012, point out that even though the GSB loans are
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1 Debs we are in fact jointly liable for them, correct? Co-borrowers as well as both on the
2 ground lease?
3 31. Subsequently, when questioned by Plaintiff about the aggressive timing
4 requiring repayment of this loan by August of 2013, Rajan responded again, I can assure you
5 that all of the decisions I have communicated to you have been based on discussions with, and
6 represent the collective opinion of, everyone [italics added] in the dean's office.
7 32. At the time of these decisions and exchanges, Rajan had not been informed of,
8 and did not know about Dean Saloners romantic and sexual relationship with Plaintiffs wife,
9 Professor Gruenfeld. Indeed, none of the Senior Associate Deans, senior administrators at the
10 GSB, or any other faculty members knew of the relationship between their Dean and
11 Professor Phills wife, Professor Gruenfeld.
12 33. Subsequent to beginning his clandestine romantic relationship with Plaintiffs
13 wife, Dean Saloner expressed animus toward Phills as well as jealousy, both related to his
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14 marriage to Professor Gruenfeld. He also expressed a desire for Phills to leave his position at
15 Stanford to Rajan and other faculty at the GSB.
16 34. On November 30, 2012, facing a deadline to return to Stanford full time or
17 resign, Professor Phills expressed his concerns about returning to Stanford and the GSB in a
18 letter to Provost John Etchemendy. He made reference to the unusual and problematic
19 personal circumstances surrounding this difficult decision [which] have created a situation
20 that not only violates university policies and legal requirements regarding fair employment,
21 but also any reasonable standard of fairness in an institutional setting, especially an academic
22 one. He stated his discomfort with returning to his position full time and expressed his
23 desire to avoid litigation saying he hoped that through discussion and negotiation, we can
24 eventually resolve this matter constructively and in the best interests of all involved.
25 35. In an email sent shortly after the letter, Phills requested that Etchemendy take
26 all appropriate steps to protect me from retaliation by the individuals involved and to protect
27 any records, data or information that might be or become relevant to the investigation of this
28
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1 matter. In a responding email that same day, Etchemendy stated, I am aware of some
2 aspects of your personal circumstances, but not well enough to understand why you cant
3 return. In response, Phills noted I am not sure how much you know about the situation, but
4 I will suspect you will hear from Garth at some point soon once he gives you more
5 details, you will understand why I would have concerns about returning to the GSB.
6 36. On December 7, 2012, Professor Phills filed for divorce from Gruenfeld.
7 37. By joint agreement, Professor Phills has remained in the family home, with the
8 couples two young children and his elderly mother and has assumed sole financial
9 responsibility for the mortgage, taxes, and insurance. Professor Phills current housing is
10 essential to the emotional and financial stability of his family and, most importantly, the best
11 interests of his children.
12 38. In early December 2012, Provost Etchemendy granted an extension of
13 Plaintiffs leave of absence through March 31, 2013.
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14 39. In February 2013, Professor Phills detailed his complaint that Stanford had
15 permitted Dean Saloner and his deputies to maintain a hostile work environment and to
16 retaliate against Professor Phills. The University dismissed his concerns and reiterated its
17 refusal to extend the existing loans to Phills and its demand that the one loan controlled by the
18 Deans office at the GSB be repaid. They provided no documents, cited no specific policy,
19 and offered no evidence to support this decision.
20 40. In early March 2013, Deborah H. Gruenfeld filed a meritless request for a
21 domestic violence restraining order against Plaintiff Phills along with a request for primary
22 custody of the couples two children despite the fact that they had shared equal custody for
23 the nine months of separation and had a verbal agreement as well as a written (but not signed)
24 parenting plan formalizing joint custody. Gruenfelds complaint was based on a false
25 allegation that there was a physical altercation between Plaintiff and Gruenfeld on March 3,
26 2013. At the time of the incident, Gruenfeld did not call the police or go directly to the police
27 station. Instead she went directly to Saloners residence on campus. After the two consulted,
28 he subsequently took her to the Stanford Police station where she filed a complaint of
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1 domestic violence. Based on her initial statement, Gruenfelds request for an Emergency
2 Protective Order (EPRO) was denied. Two days later, she subsequently filed a second request
3 for a restraining order and primary custody repeating and inflating her original allegations.
4 This motion, along with a temporary restraining order (TRO) granting Gruenfeld immediate
5 primary custody of the minor children was granted ex parte. Gruenfelds declaration in
6 support of this motion contained numerous statements that have since been refuted by email,
7 text, and documentary records, as well as statements made to the police by Gruenfeld and
8 Phills minor children and other witnesses.
9 41. The restraining order obtained by Gruenfeld was subsequently dismissed with
10 prejudice. In addition, the statements made in her declaration to obtain the TRO were found
11 to be unsupported and internally inconsistent by the court-appointed child custody evaluator,
12 who recommended restoration of joint and equal custody in December of 2013.
13 42. The terms and conditions of the ex parte request and the TRO were structured
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14 so as to prevent Professor Phills from being on the Stanford campus, and to place him in
15 jeopardy of violating the order when he was in his own residence, which is located on the
16 Stanford campus.
17 43. On March 7, 2013, Phills counsel issued a subpoena to the Stanford
18 University Department of Public Safety seeking records of the incident on March 3, 2013.
19 When these records were produced, they did not include any report or evidence other than the
20 original police report. Although Officer De Vlugt of the Stanford Police interviewed Deborah
21 Gruenfeld and Phills two daughters on March 6, 2013, on videotape, and subsequently
22 conducted a follow up phone interview with Gruenfeld on March 8, 2013 (audiotaped), the
23 Stanford Department of Public Safety failed to provide or even acknowledge the existence of
24 this evidence. Hence on April 8, 2013, Phills counsel issued a second subpoena to the
25 Stanford University Department of Public Safety seeking all documents and evidence
26 pertaining to the Stanford Polices investigation of the alleged March 3, 2013 incident and
27 explicitly demanded, any and all records of subsequent interviews and/or statements taken by
28 DEPUTY MOON, DEPUTY BATES, or any other deputies from DEBORAH GRUENFELD
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1 or the parties' minor children, INDIA PHILLS or DAYSSI PHILLS. The response to this
2 subpoena on April 24, 2013 included a response from Stanford Officer Deputy A. James,
3 made under penalty of perjury, stating There are no new supplemental reports available
4 detailing any subsequent interviews by any Stanford DPS deputy. On May 28, 2013, Phills
5 counsel again wrote to the Stanford University Department of Public Safety asserting that she
6 was aware that Gruenfeld and both children were interviewed on March 6, 2013, and
7 complaining that no notes of these interviews were provided in response to the original
8 subpoena, or the second subpoena specifically requesting said documents. On June 4, 2013,
9 Phills counsel again wrote to the Stanford Department of Public Safety seeking production of
10 the documents. Finally, on June 17, 2013, a narrative report responsive to the April 8, 2013
11 subpoena was produced by the Stanford Police. The childrens statements clearly rebutted
12 any allegation that Phills engaged in any inappropriate physical conduct on March 3, as
13 falsely alleged by Gruenfeld. Stanford suppressed these documents for approximately three
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14 months, during much of which time Phills had a court order restraining him from contact with
15 his spouse, which also meant that he was restrained from freedom of movement at his
16 workplace, and continued to be under the threat of additional permanent restraints until the
17 Court ruled in his favor.
18 44. Saloner was involved in helping Professor Gruenfeld to make these allegations
19 and even took her to the police station to file her complaint. Saloner was identified in the
20 report prepared by Stanford Police, though they make no mention of his role or whether he
21 was questioned or provide any information or statements in support of Gruenfelds
22 allegations. His involvement as the Dean of the $400 million campus that sits less than 200
23 yards from the station influenced the conduct and actions of the officers involved. The audio
24 recordings of the interview with Phills on March 3, 2013 are inconsistent with the statements
25 made in their written report, further suggesting possible bias.
26 45. Jan Thomson, Director of Faculty Staff Housing, reiterated the Universitys
27 specious and retaliatory position on the loan matter in an email sent jointly to Gruenfeld and
28 Phills on March 29, 2013, stating per the terms of the housing loans, when 680 Junipero
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1 Serra Boulevard is no longer her [Gruenfelds] principal place of business, the loans become
2 due. As a senior housing official at Stanford familiar with the documentation written by
3 Stanford attorneys, of the loan due date, Ms. Thomson knew, or should have known, that her
4 statement was false.
5 46. On April 8, 2013, Professor Phills responded to Thomson informing her that
6 Gruenfeld had been involved in an ongoing relationship with Saloner, and that Saloner
7 participated in the decision to deny Phills the loans that were in both Gruenfeld and Phills
8 name, despite the fact that, as an Academic Council member, Phills remained eligible.
9 Thomson responded by email on April 16, 2013, falsely asserting on behalf of Stanford that
10 the loans had been extended to Gruenfeld individually, not to Phills, despite acknowledging
11 that his name was on all the mortgage documents.
12 47. On March 28, 2013, Phills wrote to Madhav Rajan pointing out that, if
13 Stanford was demanding that he return to his position full time on March 31, 2013, this would
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14 place him in untenable position in that Phills would have to return to a hostile work
15 environment, and that he had received no indication that Stanford had done anything to
16 protect him from further harassment and discrimination.
17 48. On March 29, 2013, Rajan notified Phills that he had obtained authorization
18 from the Provosts office to extend his leave on a part-time basis for the Spring Quarter, but
19 only as a short-term exception. Rajan claimed that Dean Saloner had long since recused
20 himself from all decisions to the terms and conditions of your employment and claimed he,
21 Rajan, would be handling all such matters, in consultation with the Provosts office as
22 required.
23 49. On April 8, 2013, Phills wrote back to Rajan noting that Rajan had
24 acknowledged in his November 7 email that he had consulted with Saloner on the loan issue
25 noting that Saloner was in a clandestine, undisclosed relationship with Gruenfeld at that point
26 in time. Phills pointed out that Rajan and the other senior associate deans reported to Saloner.
27 50. On April 13, 2013, Provost Etchemendy wrote to Phills admitting that he knew
28 of the Saloner/Gruenfeld romantic relationship prior to being notified by Phills, and
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1 acknowledging that Saloner was required to recuse himself. The Provost asserted that Saloner
2 did so and that the decision not to extend the housing loans was not made by Saloner, despite
3 Rajans statements to the contrary. He did acknowledge that Saloner had been informed of
4 the recommendation by Rajan. The Provost claimed that the relationship between Plaintiff
5 and his wife, recruited as dual career couple to Stanford, was equivalent to Dean Saloners
6 relationship with his wife, failing to acknowledge the supervisory power of Dean Saloner as
7 well as the clandestine nature of the affair.
8 51. Phills responded to this email on April 15, 2013, reminding Etchemendy that
9 in October and November 2012, a number of decisions adversely affecting the conditions of
10 his employment were made by Saloners office; that on November 7, 2012, Senior Associate
11 Dean Rajan informed Phills that Saloner had participated in the decision to call in the home
12 loans and to demand early repayment; that this decision advanced Professor Gruenfelds
13 interests over Phills in the ongoing litigation over the disposition of the assets and liabilities;
PHONE (650) 843-1900 FAX (650) 843-1999
14 and that prior to March 29, 2013, no one at Stanford had communicated to Phills that Saloner
15 had notified Etchemendy of the relationship or that he had recused himself.
16 52. On April 19, 2013, Etchemendy wrote to Phills insisting that Phills return to
17 the GSB full-time for the fall term. While acknowledging that while Phills may have been
18 included on the lease and on the loans, Etchemendy repeated the Universitys assertion that
19 the loans were long since due for repayment.
20 53. On May 10, 2013, Phills met with Rajan and indicated that he would be willing
21 to teach in the fall, despite his concerns about ongoing hostility and retaliation. In response to
22 several inquiries on July 22, 2013, Rajan emailed Phills acknowledging that there was no
23 repository of data about the home loans from which the claims asserted by the University
24 could be supported. Rajan admitted, once again, that the decision to not extend the home loan
25 to Phills was recommended to Saloner on November 7, 2012, after his affair with Gruenfeld
26 had started.
27 54. On August 5, 2013, Phills received a letter notifying him of his academic
28 years salary for the year beginning September 1, 2013. The lead signature on the letter was
15
COMPLAINT Case No.
1 that of Dean Saloner, and the letter states that the amount of the proposed salary was proposed
2 by Saloner and his subordinates.
3 55. On August 23, 2013, Phills received a Notice of Case Closure and Right to Sue
4 letter from the California Department of Fair Employment and Housing in connection with his
5 complaint in DFEH Matter No. 155220-65513, in which he alleged discrimination,
6 harassment, and retaliation based on color, marital status, race and gender.
7 56. On September 27, 2013, Etchemendy confirmed to Phills that he would be
8 granted the right to teach part-time during the Fall Quarter, but noting that he was requiring
9 Phills to resign from his position at Apple and return to duty full-time effective January 2014,
10 or resign from his position at the University.
11 57. On December 19, 2013, Phills counsel wrote to the University, pointing out
12 that the conflicts of interest of the home loans and Saloners ongoing role in salary
13 determination and influence over those assigning courses and executive education had not
PHONE (650) 843-1900 FAX (650) 843-1999
14 been addressed, and further indicating that Phills could not make a decision about returning
15 full-time until these issues were addressed. No substantive response has been received from
16 the University, nor has the University indicated whether or not Phills remains a member of the
17 faculty or the Academic Council. However, Phills has been receiving communications
18 concerning scheduling certain classes he is to teach, and therefore assumes he remains a
19 member of the Academic Council and a member of the faculty of the GSB at the date of filing
20 of this Complaint.
21 58. Stanford and its outside counsel failed to conduct any meaningful investigation
22 Plaintiffs complaint of discrimination and harassment and refused to engage in mediation or
23 private discussions as they originally indicated.
24 59. Dean Saloner continues to have access to Professor Phills confidential
25 employment records and the outcomes of decisions that he can communicate to Professor
26 Gruenfeld to advance her interests in the divorce and custody dispute. For instance, the
27 official letters informing Phills of his salary for both the 2012-2013 and the 2013-2014
28 academic year, were signed by Saloner.
16
COMPLAINT Case No.
1 60. In November of 2013, Dean Saloner, in an attempt to further Gruenfelds
2 efforts to use custody as a means of retaliating against Phills for his complaints against her
3 and Saloner, provided a statement to the custody evaluator that made disparaging statements
4 about Professor Phills as a parent, despite the fact that Saloner has had virtually no interaction
5 with him outside the context of his supervisory and professional relationship. Moreover,
6 Saloner also made false allegations about Phills statements related to the employment
7 dispute. He also did not disclose his role as Phills and Gruenfelds supervisor, as well as
8 complaints of sexual harassment, discrimination and retaliation against him.
9 FIRST CAUSE OF ACTION
DECLARATORY RELIEF
10 (AGAINST STANFORD)
11 61. Plaintiff realleges and incorporated herein by reference paragraphs 1 through
12 60, above as though fully set forth herein.
13 62. An actual controversy has arisen and presently exists between Phills and
PHONE (650) 843-1900 FAX (650) 843-1999
14 Stanford concerning their respective rights and obligations with respect to the loans made in
15 connection with Phills residence on the Stanford campus and with respect to Phills
16 employment status. Phills contends that, pursuant to the terms of the Notes, as drafted by
17 Stanfords counsel, the Notes are not due until there is no longer an Eligible Person residing
18 at the property. Stanford contends that the terms of the Notes are not binding and that the
19 policies pursuant to which it issued the Notes control, whether or not those policies were
20 explained to or agreed to by Phills. Phills further contends that, even if Stanford is authorized
21 to call the loan, it should not be called based on a discretionary decision made by the GSB
22 Deans office, given that that the Dean of the GSB was in a sexual and romantic relationship
23 with Phills wife, who wished to have him removed from the residence to serve her ends and
24 to gain advantage in their separation and child custody disputes. Stanford contends that any
25 such conflict of interest is non-existent or irrelevant.
26 63. Stanford contends that Phills, who has been on a leave of absence, is required
27 to return to work full-time under Saloners supervision, effective immediately in order to
28 retain his faculty status pursuant to Stanfords academic procedures. Phills contends that
17
COMPLAINT Case No.
1 Stanford must alleviate the severe conflict posed by Saloners involvement with Phills
2 spouse and his assistance to her in the ongoing contentious divorce and custody proceedings,
3 and must cease trying to wrongly accelerate the Notes before he can be expected to return to
4 work. In the interim, Phills is not insisting on being paid, but he does insist that Stanford
5 cannot terminate his academic status for refusing to return until these issues are resolved.
6 64. Phills therefore requests a judicial determination of the parties rights, duties
7 and obligations in connection with the Notes as follows: That the provisions of the Notes
8 requiring payment of interest and principal do not become effective until Phills ceases to be a
9 member of the Academic Council, or he sells the residence or another condition specified in
10 the Notes occurs, and that Stanford cannot terminate his membership in the Academic
11 Council for failure to return from leave unless and until it agrees not to subject him to
12 supervision by Saloner and premature acceleration of the Notes.
13 WHEREFORE, Plaintiff prays for relief as set forth below.
PHONE (650) 843-1900 FAX (650) 843-1999
14 SECOND CAUSE OF ACTION

MARITAL STATUS DISCRIMINATION UNDER FEHA
16 65. Plaintiff realleges and incorporates herein by reference paragraphs 1 through
18 66. California Government Code 12940, et seq. specifically prohibits employers
19 from discriminating against employees on the basis of marital status. Stanford discriminated
20 against Phills on the basis of his marital status when the Dean of the GSB took away teaching
21 opportunities and withheld the employment benefit of a long-term loan as set forth more fully
22 above.
23 67. By its acts and omissions alleged above, Defendants intentionally deprived
24 Plaintiff of equal employment opportunities, and otherwise adversely affected his status as an
25 employee on the basis of Plaintiffs marital status in violation of California Govt. Code
26 12940, et seq.
27 68. As a direct and foreseeable result of Defendants unlawful discrimination,
28 Plaintiff has suffered, and will continue to suffer, general physical, mental and psychological
18
COMPLAINT Case No.
1 damages in the form of extreme and enduring worry, suffering, pain, humiliation,
2 embarrassment, mental anguish, and emotional distress.
3 69. As a direct, foreseeable, and proximate result of Defendants unlawful conduct,
4 Plaintiff has been injured in that he has suffered and will continue to suffer a loss of income
5 and employment benefits in amounts to be proved at trial.
6 70. In acting as alleged above, Defendants acted maliciously, fraudulently,
7 despicably, and oppressively with the wrongful intention of injuring Plaintiff from an
8 improper motive amounting to malice in conscious disregard of Plaintiffs rights, and the
9 persons who committed the unlawful acts described above, were officers, directors or
10 managing agents of Stanford, and were acting within the scope of his, her or their
11 employment. Plaintiff is entitled to recover punitive damages from Defendants in amounts to
12 be proved at trial.
13 71. As a result of Defendants acts of discrimination as alleged herein, Plaintiff is
PHONE (650) 843-1900 FAX (650) 843-1999
14 entitled to reasonable attorneys fees and costs of suit, as provided for by Govt. Code
15 12965(b).
17 THIRD CAUSE OF ACTION
RACE DISCRIMINATION UNDER FEHA
22 from discriminating against employees on the basis of race. Stanford discriminated against
23 Phills on the basis of his race when the Dean of the GSB, with racial animus, took away
24 teaching opportunities and withheld the employment benefit of a long-term loan as set forth
25 more fully above.
28 employee on the basis of Plaintiffs race in violation of California Govt. Code 12940, et seq.
19
COMPLAINT Case No.
PHONE (650) 843-1900 FAX (650) 843-1999
17 12965(b).
19 FOURTH CAUSE OF ACTION
GENDER DISCRIMINATION UNDER FEHA
24 from discriminating against employees on the basis of gender. Stanford discriminated against
25 Phills on the basis of his gender when the Dean of the GSB took away teaching opportunities
26 and withheld the employment benefit of a long-term loan as set forth more fully above.
20
COMPLAINT Case No.
1 employee on the basis of Plaintiffs gender in violation of California Govt. Code 12940, et
2 seq.
PHONE (650) 843-1900 FAX (650) 843-1999
19 12965(b).
21 FIFTH CAUSE OF ACTION
WRONGFUL TERMINATION PUBLIC POLICY
25 87. It is a fundamental public policy of the State of California to prohibit
26 employers from terminating, disciplining or discriminating against employees on the basis of
27 marital status, race, or gender as established by Cal. Govt. Code 12940, et seq.
28
21
COMPLAINT Case No.
1 88. Phills change in marital status and his race and gender were substantial factors
2 in Defendants decision to deny Plaintiff the benefits of the existing home loans and executive
3 education opportunities.
4 89. Defendants discrimination against Plaintiff was in violation of the
5 fundamental public policy of the State of California as expressed in Cal. Govt. Code. 12940,
6 et seq.
12 Plaintiff has been injured in that the has suffered, and will continue to suffer, a loss of
13 compensation, career path opportunities, costs, all in amounts to be proved at trial.
PHONE (650) 843-1900 FAX (650) 843-1999

15 despicably, and oppressively, with the wrongful intention of injuring Plaintiff, from an
16 improper motive amounting to malice, and in conscious disregard of Plaintiffs rights, and the
17 persons who committed the unlawful acts described herein were officers, directors and/or
18 managing agents of Defendants, and were acting within the scope of his, her or their
21 SIXTH CAUSE OF ACTION
UNLAWFUL HARASSMENT
22 (AGAINST STANFORD AND SALONER)
23 93. Plaintiff realleges and incorporates by this reference the allegations in
24 paragraphs 1 through 92, as if fully set forth here.
25 94. Government Code 12940 prohibits harassment of employees by employers,
26 co-workers and supervisors on the basis of race, gender and marital status.
27 95. By the actions set forth above, Defendants Stanford and Saloner harassed
28 Plaintiff because of his race, gender and marital status.
22
COMPLAINT Case No.
PHONE (650) 843-1900 FAX (650) 843-1999
17 12965(b).
19 SEVENTH CAUSE OF ACTION
INTERFERENCE WITH CONTRACTUAL RELATIONS
20 (AGAINST GARTH SALONER)
23 101. Plaintiff and Stanford had an existing contractual relationship with regard to
24 loans made in connection with Plaintiffs residence on the Stanford campus.
25 102. Defendant Saloner had knowledge of the contractual relationship between
26 Phills and Stanford.
27
28
23
COMPLAINT Case No.
1 103. Defendant Saloner intentionally interfered with the contractual relationship
2 with Plaintiff by insisting that the GSB be paid back prior to the time required by the Notes
3 executed by Phills.
4 104. Saloners actions have had the effect of causing the Stanford Housing Office
5 and Stanford to insist on early payment of the loans. Defendants actions have damaged
6 Plaintiff because he no longer has security that his home loan financing will remain in place
7 and he will be able to continue to reside on the Stanford campus, which was the intention of
8 Defendant Saloners actions.
9 105. Defendant Saloners actions were undertaken for his own personal benefit in
10 that he had a romantic and sexual relationship with Plaintiffs separated spouse, Gruenfeld,
11 and he and Gruenfeld actively sought to force Plaintiff out of the house on campus for their
12 own ends of discouraging the Plaintiff from remaining in his position at Stanford in the same
13 department as Saloner and Gruenfeld. Although Saloner purported to act on behalf of
PHONE (650) 843-1900 FAX (650) 843-1999
14 Stanford, he acted outside the course and scope of his employment, and in conflict of interest
15 with his obligations to Stanford by undertaking this vindictive course of conduct.
28
24
COMPLAINT Case No.
4 EIGHTH CAUSE OF ACTION
INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE
8 110. Plaintiff had an economic relationship with Stanford University and various
9 recipients of executive education programs that created the probability of future economic
10 benefit to Plaintiff, including 1) the ability to reside in his home without payment of principal
11 or interest; and 2) substantial additional income to be derived from executive education
12 programs designed by Plaintiff, and related consulting opportunities, using the text book
13 written by Plaintiff.
PHONE (650) 843-1900 FAX (650) 843-1999
14 111. Defendants Stanford and Saloner had knowledge of these relationships.

15 112. Defendant Saloner and Stanford intentionally disrupted Plaintiffs relationships
16 by interfering with the continued enjoyment of the loan agreements, and by intentionally
17 dictating that others teach the courses developed by Plaintiff and which used Plaintiffs
18 materials, thereby depriving Plaintiff of income.
19 113. Defendants conduct was wrongful in that it was carried out in order to
20 facilitate the clandestine relationship between Saloner and Gruenfeld and not for any
21 legitimate academic or policy reason. It is a violation of law and Stanford policy for Saloner
22 to interfere or take any intentional action against the spouse of a subordinate with whom he
23 wished to pursue a sexual and romantic relationship, particularly when that spouse was also
24 employed by the entity over which Saloner had control, the GSB.
25
COMPLAINT Case No.
12 NINTH CAUSE OF ACTION
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
PHONE (650) 843-1900 FAX (650) 843-1999

16 118. Defendants Saloner and Stanfords actions as alleged above were extreme and
17 outrageous in that the dean of a graduate school undertook punitive and retaliatory actions
18 against the husband of a faculty member with whom he desired to pursue a romantic and
19 sexual relationship. Stanford, through its Provosts and others, ratified and approved Saloners
20 actions.
21 119. As a proximate result of Saloner and Stanfords actions, Plaintiff has suffered
22 severe emotional distress.
27
28
26
COMPLAINT Case No.
12 PRAYER
13 WHEREFORE, Plaintiff prays for judgment and relief as follows:
PHONE (650) 843-1900 FAX (650) 843-1999
14 1. For general, compensatory, special and incidental damages according to proof;

15 2. For punitive damages;
16 3. For injunctive relief, including possession of the property;
17 4. For declaratory relief as described above;
18 5. For reasonable attorneys fees;
19 6. For the costs of suit in this action; and
20 7. For such other and further relief as the court may deem proper.
21 Dated: April 3, 2014
22 PIERCE & SHEARER LLP
23
24 By:
Andrew F. Pierce
25 Attorneys for Plaintiff
JAMES A. PHILLS, JR.
26
27
28
27
COMPLAINT Case No.

2014.04.02 Phills v. Stanford Complaint

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2014.04.02 Phills v. Stanford Complaint

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1 Andrew F. Pierce (State Bar No.

14 THE BOARD OF TRUSTEES OF THE

14 SECOND CAUSE OF ACTION

14 92. In acting as alleged above, Defendants acted maliciously, fraudulently,

14 111. Defendants Stanford and Saloner had knowledge of these relationships.

14 117. Plaintiff realleges and incorporates by this reference the allegations in

14 1. For general, compensatory, special and incidental damages according to proof;

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