Suit Accuses ICN Chairman of Sexually Harassing Employee

SANTA ANA — Milan Panic, reelected Wednesday as chairman of ICN Pharmaceuticals Inc., was accused in a civil lawsuit filed during the day of sexually harassing a female employee for six years, often grabbing her and urging her to have his baby.

The lawsuit filed by Michelle McKenney, a former investor relations manager until she was demoted, is the fourth suit in the last four years to allege sexual harassment, discrimination and retaliation by Panic.

The suit also raises again the question of whether other directors of the Costa Mesa company will take any action to rectify the claims of a growing number of women.

McKenney’s suit, as previous ones have, asserts that ICN has failed to halt the alleged harassment, essentially condoning the controversial chairman’s behavior.

The lawsuit was filed in Orange County Superior Court as about 100 shareholders voted at their annual meeting at corporate headquarters to reelect Panic and four other directors to three-year board terms.

Though Panic and corporate executives haven’t been served with the complaint yet, a spokesman said the company is “familiar” with the allegations. Before suing, McKenney filed a complaint with the state Fair Employment and Housing agency.

“The allegations that we’re familiar with are baseless, as far as we’re concerned, and we’ll defend this suit vigorously,” said spokesman Herb Lightstone. “ICN has strong policies against sexual harassment.”

He said that “these trendy lawsuits” have become a fact of corporate life in America.

Neither McKenney nor her lawyer would comment.

Previously, the company has settled lawsuits brought by former employees Colleen James and Debra Levy for undisclosed amounts. Panic and the company have denied the charges in both cases.

Levy accused Panic of pressuring her into having sex and letting him father her child, then forcing her from her job. James charged that she was fired after she threatened to make trouble over Panic’s advances.

In a pending lawsuit, Mary Martinelli, the drug maker’s former director of human resources, asserts that Panic requested sex from her even though she consistently refused his unwanted advances.

Martinelli claims that ICN executives have known since 1992 of Panic’s unwanted advances and haven’t taken measures to stop him, even after other former employees had filed harassment cases.

McKenney alleges in her suit that Panic started making “passes” at her soon after she was hired in December 1990, and continued to harass her through most of last year.

In a group tour of his yacht in April 1991, she contends, Panic “grabbed her from behind, placing his hands on her breasts and under her skirt” as he whispered for her to stay behind. The next month, he offered to take her and her son to Cabo San Lucas so the boy could play during the day and they could “make their own baby” at night.

He also tried, the suit states, to pressure her into accompanying him to Yugoslavia while he served as prime minister in late 1992. Later, she said, she was told her failure to go “could result in the loss of her job.”

In January 1994 McKenney and her new husband were attempting to buy a home but were short of cash for the down payment. “Panic offered her the money in exchange for one evening of pleasure,” the suit alleges.

Last November, she asserts, Panic called her into his office and told her that “ICN’s lawyers were concerned that she was a potential threat because of his treatment of her,” the suit states. “He told her that they asked him to apologize to her and have her sign a statement that there had never been any physical contact between them.”

The suit alleges that the company is trying to force a number of women to sign binding arbitration agreements to prevent suits against Panic and has required that any arbitrations be confidential “to prevent public disclosure of Panic’s misbehavior.”

After a strategic planning meeting late last year, McKenney was removed from her job, “given nothing to do” and eventually transferred to an ICN facility in Irvine.

Meantime, she asserts, she was passed over for a promotion, which was given to a co-worker who “was involved in a sexual relationship with Panic” and, thus, received preferential treatment.

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Panic’s Problems

Four sexual harassment lawsuits have been filed against ICN Pharmaceuticals Chairman Milan Panic since 1993. Details on the suits:

1993

* May 25: Former employee Colleen James files suit against ICN and Panic, claiming he sexually harassed her verbally and physically. She also alleges that he fired her after she threatened to make trouble over his unwanted advances.

Status: Settled out of court in August 1993; terms not revealed

1995

* Jan. 31: Another former employee, Debra Levy, sues Panic and ICN, claiming he pressured her into sex and fathered her child before forcing her from her job.

Status: Settled out of court in July 1996; terms not revealed

1997

* Jan. 14: Former ICN director of human resources Mary Martinelli files suit against ICN, alleging that Panic sexually harassed her and that ICN knew of his behavior toward her and other female employees but did nothing to stop it.

Status: Pending

* May 28: Former ICN investor relations manager Michelle McKenney files sexual harassment and discrimination suit against ICN in Orange County Superior Court.

Status: Pending

Source: Times reports, Orange County Superior Court; Researched by JANICE L. JONES / Los Angeles Times