Andre Chreky - owner of the high-profile Andre Chreky salon in downtown Washington - could face additional claims in settlements with two former employees who had accused him of sexual harassment.
In opinions issued yesterday, U.S. District Court Chief Judge Royce Lamberth affirmed (PDF) a bankruptcy court judge’s approval of Chreky’s $7 million settlement with one former employee, but disagreed (PDF) with the bankruptcy judge’s finding that a limited liability company Chreky purportedly owns with his wife cannot be used to satisfy the claims against him.
Chreky was the subject of sexual harassment suits filed in U.S. District Court for the District of Columbia by two former employees, Ronnie Barrett and Jennifer Thong. Following a jury trial in February and early March 2010, Barrett was awarded $2.3 million in damages. Thong’s trial was scheduled to begin soon after Barrett’s trial concluded, but Chreky and his company, Andre Chreky Inc., first filed for chapter 11 bankruptcy.
Both Barrett and Thong filed adversary proceedings against Chreky in bankruptcy court. Chreky ultimately settled with Thong for $7 million, an agreement approved by the bankruptcy judge in December, according to Lamberth's opinion. Barrett challenged the agreement, pointing out that Chreky had originally rejected a claim for $3 million from Thong and that the court should not have allowed the much larger settlement without any new evidence.
Lamberth upheld the bankruptcy court’s approval, noting that the $3 million and $7 million deals were different. The first, he wrote, would have awarded Thong a flat $3 million, while the second would give her a claim to $7 million but not necessarily a guarantee that she would receive all of it. Lamberth also agreed with the bankruptcy judge that Thong could be entitled to a larger settlement than the award Barrett received, since Thong’s complaint included "much worse" allegations of sexual assault.
But Lamberth also sided with Barrett on one of her other appeals, finding that the bankruptcy judge erred in ruling that Chreky and his wife were tenants by the entireties in the ownership of a limited liability company created to purchase non-residential properties. Local laws dictate that if a married couple holds a property as tenants by the entireties, that property is not subject to claims lodged against only one member of the couple.
Lamberth agreed with Barrett that the bankruptcy judge was mistaken in making a decision without first allowing Barrett to present evidence that Chreky alone was in charge of the limited liability company. He remanded the case back for further consideration to the bankruptcy court, noting that if Barrett does present evidence, the burden will shift to Chreky to prove the company in question shouldn’t be subject to claims.
Barrett was represented on appeal by Linda Correia of Washington’s Webster, Frederickson, Correia & Puth. Chreky was represented by Nelson Cohen of Washington’s Zuckerman Spaeder. Neither could immediately be reached for comment.