Employees’ Retirement System of Rhode Island v. Paul Marciano et al.

Court: Delaware Court of Chancery
Case Number: 2022-0839-NAC
Case Leader: Rebecca E. Boon
Case Team: Daniel Meyer, Mae Oberste

This stockholder derivative action seeks damages on behalf of Guess, Inc. (“Guess”) related to allegations of sexual misconduct against Guess co-founder Paul Marciano.  On September 19, 2022, BLB&G initiated this lawsuit.  To view the public version of the Complaint, see the Case Documents section of this page.

In 2018, after the #MeToo movement caused many companies to revisit their sexual harassment policies, Kate Upton and several other models levied high-profile accusations of sexual harassment and assault against Marciano.  At the time, Marciano was Executive Chairman of Guess’s Board of Directors.  In response to these allegations, the Board of Directors formed a special committee to conduct an investigation.  In June 2018, the special committee concluded that plausible allegations of improper conduct “could, and did, arise.” 

Immediately following the investigation, Guess removed Marciano as a corporate officer and Executive Chairman of the Board.  The company also adopted specific anti-harassment policies.  But Marciano was permitted to stay on as a member of the Board.  Worse still, just a few months later, in January 2019, Guess reinstated Marciano as its Chief Creative Officer, a position that enabled Marciano to continue abusing Guess models.  Since January 2019, several women have come forward to accuse Marciano of sexual harassment and assault.  Despite multiple allegations of assault, the Board of Directors has continued to protect Marciano.

The Complaint asserts breach of fiduciary duty claims against Marciano in his capacities as an officer, director, and controlling stockholder of Guess.  In support of this claim, the Complaint alleges that Marciano propositioned potential Guess models for modeling contracts in exchange for sexual favors, terminated or rejected models’ employment opportunities if they refused his unwanted advances, and offered hush money to models to ensure that his misconduct would not be revealed.

The Complaint also asserts breach of fiduciary duty claims against Guess’s other directors.  These alleged breaches are the result of the directors willfully ignoring models’ allegations of Marciano’s sexual abuse.  Moreover, the other directors allowed Marciano to maintain his seat on the Board and serve out his term of employment as Chief Creative Officer after the investigation in 2018 found evidence of plausible allegations of sexual misconduct.