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Melissa Muller v. Rich Morgan

December 27, 2012


The opinion of the court was delivered by: Harry D. Leinenweber, Judge United States District Court



According to her 28-page, 8-count Complaint, the Defendants sexually harassed Melissa Muller ("Muller"), interfered with her family and medical leave rights, retaliated against her for cooperating in a company investigation of the sexual harassment and for filing a claim with the EEOC, intentionally inflicted emotional distress on her, interfered with her contractual relationship and prospective economic advantages, and conspired against her. The Defendants include Rich Morgan ("Morgan"), the former CEO of American Laser Skincare ("ALS") which was Plaintiff's employer, Chelsea Klinke ("Klinke"), Vice- President of Sales and Clinic Management for ALS, Rhythm Manani ("Manani"), General Counsel and Vice-President of Human Resources of ALS, and Bellus ALC Investments 1, LLC ("Bellus"), the purchaser of the assets of ALS from the latter's bankruptcy estate.

ALS, prior to its sale out of bankruptcy, was in the business of providing laser hair removal and noninvasive aesthetic services in multiple locations throughout the United States. Muller commenced her employment with ALS in 2006 as a laser technician. She excelled at her job and was quickly promoted to Clinic Manager in charge of ALS's Clinic in Chicago's Lincoln Park. In December 2009, Muller attended a team dinner for the entire Midwest Region, at which Morgan and Klinke were in attendance. At this dinner Morgan asked her a number of questions about her intentions as to future pregnancies, and whether she was happily married. Muller took this latter inquiry as an expression of Morgan's sexual and romantic interest in her. Shortly after the meeting she was promoted to the position of Regional Manager of the Midwest. Over the next year she successfully increased the region's sales.

In January 2010, Muller attended an executive management team meeting along with Morgan, Klinke, and several other members of ALS management. At this meeting Morgan suggested to the gathering that they talk about sex. He then proceeded to ask Muller and another female regional manager how many sexual partners they had had. In September 2010, the company held another dinner for regional managers and executive staff. Morgan became visibly intoxicated at the dinner and made leering comments to a number of female attendees. During dinner the attendees discussed what sort of plastic surgery they would consider having done. Muller and another female attendee said they would consider plastic surgery on their breasts. Morgan then stated that he was an expert on the subject and he should take a look at their breasts. Without obtaining approval he proceeded to do so.

After this meeting, another female attendee hired a lawyer and complained about the way female managers had been treated. This prompted the company to initiate an investigation to be conducted by an outside attorney. In the weeks following, Muller was contacted by the administrative assistant to the outside attorney, Manani, and Klinke who informed her that she would have to be interviewed as part of the investigation. Klinke contacted Muller multiple times prior to her interview in an apparent attempt to determine what Muller would tell the investigators. She also relayed her opinion as to how important Morgan was to ALS and that she did not want him to be removed. Klinke asked Muller how she felt about Morgan and when she told Klinke that she thought he might be demoted, Klinke made sarcastic remarks and then implored Muller to testify that she had not felt violated when Morgan looked down her shirt.

In September, Muller flew to Michigan to be interviewed by the outside counsel. Prior to her meeting Klinke again called Muller and urged her to keep her answers short and not to give out too much information. During the interview Muller told the counsel about the shirt incident as well as Morgan's comments about sex and his questions about the state of her marriage, and her family plans. The counsel also asked her whether she knew about any inappropriate relationships Morgan had with the staff. Muller informed him of two relationships she was aware if that he had, one with a Clinic Manager and another with a former Regional Manager. She further informed him that at the time of the relationship Muller was the assistant to the Clinic Manager and that Morgan had flown her to Las Vegas where he gave her a very expensive watch. She also told the counsel that she had been informed that the Regional Manager had obtained money from Morgan which apparently was paid in return for her silence. The counsel asked her if she had been coached as to what to say and she told him that she had been. She stated that she was afraid that others would find out about her testimony. He informed her that only the Board of Directors would be informed about the substance of her testimony

Immediately after the interview, Klinke called Muller and grilled her about what she had said in the interview. Among other things Klinke asked Muller if she had been asked about any rumors involving Klinke and Morgan. Muller responded in the affirmative which caused Klinke to "freak out." Apparently as a result of the investigation Morgan was removed as CEO but was not fired. Shortly after this the newly appointed CEO, Steve Strauss ("Strauss"), visited Muller and asked her how she felt about Morgan's removal as CEO. She responded generally favorably but later learned from Klinke that Morgan was still employed with the company in a part-time role.

In the fall of 2010 Muller became pregnant. She told Klinke, who was unenthusiastic, and responded that they couldn't have everyone getting pregnant at the same time. In January 2011, Muller was contacted by the newly appointed Director of Sales for the West Coast along with Klinke to tell Muller that she was being placed on a Performance Improvement Plan (the "PIP"), even though her work for the company had never before been criticized. She was assured that the PIP was for guidance rather than discipline.

Subsequently she was asked to name the individual who would take her place while she was on maternity leave. After she told them her selection, it was criticized. A short time later she was told by Klinke that she needed to step down as Regional Manager and assume the position of Clinic Manager because "she didn't have what it takes to be a leader in her region." Muller began to cry and started to have contractions. She saw her obstetrician who diagnosed her has having "situational stress induced contractions." Later that month prior to her leave she was actually demoted to Clinic Manager of another Chicago clinic at greatly reduced pay.

Muller began her maternity leave in May 2011 and returned to work as Clinic Manager in July. Her clinic flourished. In August 2011 she filed a charge of discrimination with the Equal Employment Opportunity Commission (the "EEOC"). Klinke began a road show in October giving out awards for outstanding service. Even though Muller was the number one salesperson in the region she was not given an award. The following day Muller was given a "final warning" by her supervisor which stated that she had ninety (90) days to improve her performance despite her excellent sales numbers. She was told by her supervisor that she had been told by "corporate" to give the warning even though she thought that Muller was an excellent clinic manager. During this period Klinke fired Muller's assistant and refused to allow her to hire a replacement which greatly increased the amount of time Muller had to put in. Klinke then visited Muller's clinic apparently in order to criticize her performance. Muller disputed this criticism.

In December 2011, ALS filed for bankruptcy, which was just prior to Klinke's last visit. Although Muller had received her Right-toSue letter in November, she was unable to file suit against ALS because of the automatic stay that had been entered. During the pendency of the bankruptcy the ninety (90) day time period for Muller's final warning came to an end. Klinke gave Muller "a strong talking to" about her poor performance but did not fire her. In January 2012, ALS received bankruptcy court approval to sell substantially all of its assets free and clear of any liabilities. ALS announced that a private equity firm, Versa, was financing the asset sale and the assets were to be purchased through an affiliate, the Defendant Bellus. The day before the closing an unnamed individual, who identified himself as being an employee of Versa, called Muller at work and told her that she was fired effective immediately.


Muller bases her 8-count Complaint on the foregoing. All Defendants save Morgan, have moved to dismiss. Klinke, Manani, and Bellus contend that this Court has no personal jurisdiction over them, and thus they are entitled to dismissal under Rule 12(b)(2). They also contend that the statutory counts should be dismissed under Rule 12(b)(6) because none of ...

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