As HR nightmares go, this one ranks pretty highly.

This particular disaster starts with a video game — Elemental: War of Magic, a fantasy strategy computer game that was being developed by Stardock.

While working on the game, Alexandra Miseta, the company’s marketing manager, claimed that she was being harassed by the company’s CEO.

Among her accusations:

  • The CEO asked her to go on a media tour because her “nipples look better on TV”
  • On another occasion, the CEO asked her to attend a conference “not just because you’re hot,” and
  • She was sent a 100-question “purity test” by the CEO that included questions such as  “Have you visited an orgy parlor?” “Have you showered, bathed, jaccuzied or saunaed with a member of the opposite sex?” and “Have you been propositioned by a prostitute or pimp?”

After an incident during a dinner on a media tour, Miseta sent an email to the CEO asking him to stop.

The CEO responded by saying, in part:

I am an inappropriate, sexist, vulgar, and embarrassing person and I’m not inclined to change my behavior. If this is a problem, you will need to find another job … I am not willing to adapt my behavior to suit others … I’m not some manager or coworker of yours. I own the company. It, and your job here, exist to suit my purposes, not vice versa.

While I certainly agree that your rights as a person (certainly in terms of physical contact or in terms of comments made towards you regarding your private life) take precedence over my rights as the owner of the business, that is as far as it goes.

I won’t change my basic personality to suit anyone (i.e. being an inappropriate, sexist, vulgar and embarrassing person).

Miseta ended up quitting the company several weeks before the game launched in August 2010 to tepid reviews. She then sued Stardock several months later for sexual harassment.

They sued right back

Stardock officials acknowledged that the comments were intemperate and insensitive, but they claimed that they didn’t constitute sexual harassment and asked for the case to be dismissed. The court disagreed and sent the case to trial.

The company responded by suing Miseta, claiming that she “deleted, destroyed, and/or stole” marketing materials from Elemental: War of Magic while working for the company that resulted in the game’s poor performance.

There was just one problem: That may not have even happened. Several employees have since released emails from the CEO that praise the marketing team’s work and show no evidence of any issues with deleted files.

Finally, to make matters worse, the CEO took to the Internet to complain. He posted on one videogame messageboard that Miseta “[got] pissed off, [quit] without notice and [used] her network access to wipe out our marketing assets.”

The case now moves to federal court.

Sometimes you have to admit defeat

What’s to be learned from this case?

Lauren E. Moak on the Delaware Employment Law Blog points out some of the obvious ones: don’t be a jerk to employees and don’t be chauvinistic.

Another takeaway: Maybe it’s time to go over your sexual harassment policy with your execs.

And finally but perhaps more importantly, the case highlights the occasional benefit of admitting when you’re wrong.

All this company has earned by fighting this suit is notoriety and embarrassment. If it had settled the case long ago and resolved to do better in the future, as Moak notes, the mistakes this CEO made would have stopped there.

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