Kargo Moves to Stop Former Sales Exec’s $40 Million Payout in Gender Discrimination Case

Ad firm cites 'unfair process,' says arbiter acted improperly

Mobile ad shop Kargo has filed a motion to stop a $40 million award by an arbiter in a case that alleged Alexis Berger, former svp of sales for the Midwest and West Coast for Kargo, was the victim of gender discrimination, retaliation, equal pay violation, violation of wage law and breach of contract.

Kargo now says the arbiter in the case showed a “blatant disregard” for evidence that would have supported the agency’s case and generally showed signs of being biased toward the ousted employee. Attorneys for Kargo are requesting the court reduce the arbitration payout by about $36.5 million, which it says should never have been awarded to Berger because the penalty was based on New York labor law, but Berger was a Chicago resident.

“Unsealed papers are now on file with the U.S. District Court for the Southern District of New York on behalf of Kargo moving to vacate or substantially modify the arbitration award of its former employee, Alexis Berger,” said Anthony Greco, corporate counsel for Kargo, in a statement. “As set forth in our papers, the arbitration award resulted from a fundamentally unfair process in which critical evidence was disregarded by the arbitrator and quadruple damages were awarded in total contradiction of controlling law.”

Greco added: “Although Kargo had no desire to litigate this matter in the press and sought to have its filing sealed, it has no choice but to challenge such a decision that paints an entirely inaccurate portrait of the facts and the ethical standards of the company. Kargo has always endeavored to build a strong culture of diversity, inclusion and equal opportunity for all of its employees.”

Arbitrator Billie Colombaro, from the American Arbitrator Association, awarded Berger a total of $40,925,284.20 on May 31. Prior to her termination on July 22, 2016, Berger was the agency’s highest paid employee and managed approximately 30 employees.

In the spring of 2016, after the company reviewed complaints about Berger’s managerial style, she was reassigned to a new position where she would not manage any employees. When she declined the new position via her lawyer in late April 2016, she was put on leave and was later terminated.

In Colombaro’s arbitration award from May, she listed examples of the ways Berger was allegedly treated differently due to her gender. Colombaro noted that male staffers who “behaved in the same or worse manner as that for which Kargo disciplined Ms. Berger” were not disciplined and that complaints against a male executive by women were ignored because, according to the HR manager, “he was just being a boy.”

Berger also allegedly dealt with inappropriate comments based on her gender and sexuality, per Colombaro’s award, which cited incidents allegedly involving Kevin Canty, Kargo’s svp of sales for the East. “At retreats, [Canty] would comment on [Berger’s] sexuality and talk about ‘flipping her back.’ (She is gay.) He also asked her and her partner in Cannes to have ‘a threesome with him,’” Colombaro wrote.

Kargo countered that Berger herself was accused of making “inappropriate and unprofessional comments in the workplace,” such as allegedly telling a female subordinate that the woman could only attend a conference if she shared a room and bed with Berger. The employee also complained to management that Berger had a “propensity to scream at and micromanage her sales team,” according to Kargo’s new legal filing, and that Berger once said she was “not hiring any more vaginas in this office, only penises. There’s too much estrogen around here.”

Berger filed an Equal Employment Opportunity Commission (EEOC) claim against Kargo in spring 2016. According to the new legal documents filed by Kargo’s lawyers, a subsequent EEOC investigation “was unable to conclude that the information obtained establishes violations of the statutes,” and her claim was dismissed.

As previously reported by Adweek, Colombaro wrote in her 83-page arbitration ruling: “Sexual discrimination was, at the very least, a motivating factor in her termination. This was a collaborative orchestration carried out in a malicious, insidious, and humiliating manner, having the effect of depriving her of her earned commissions, her retention bonus, her stock options, her position, her livelihood, and her dignity.”

The 46-page filing by Kargo’s counsel, Wachtell, Lipton, Rosen and Katz (see full document embedded at the bottom of this article) notes that, “Petitioner turned this state of facts into an employment claim of sexual discrimination that was accepted wholesale by a single arbitrator—an arbitrator who proceeded to permit an original claim of some $3 million to mushroom into a $41 million award based in major part upon invocation of quadruple damages under the New York Labor Law—a statute which had no applicability to Petitioner, an out-of-state employee.”

Update:

On Friday Berger’s lawyers filed a reply to Kargo’s petition.

“In short, Kargo has double downed on its double standards,” wrote Berger’s lawyers Seth Rafkin and Jennifer Bogue of Rafkin Esq. in a statement. “It is shameful that Kargo now tries to blame the Arbitrator for the size of the Award.”

Below is the full document of Kargo’s request to block or reduce Berger’s arbitration award: