Laura Hauser is the General Counsel, Secretary and Chief Compliance Officer for TCP. On Friday, we learned that Ms. Hauser is also suing TCP as well its CEO, Ellis Yan.
You can read the entire suit here. We studied it over the weekend and have a few comments that follow key numbered paragraphs in the suit (in bold italics):
5. Yan and his relatives control about 70% of the stock. It’s his company and he has the most to gain and the most to lose.
10. Ms. Hauser began employment with TCP May of 2013, at which time TCP was still privately held. Obviously she does not have the history or experience at TCP, which Mr. Yan has.
12. Yan was uninhibited and undeterred in expressing his beliefs, opinions and directive regardless of tone, presentation, language and content. As the CEO, he has every right to do this. This is what CEO’s do.
13. In October 13, 2013….(Yan) physically assaulted Plaintiff. Assault is very serious and is unexcusable. Profanity can be understood, but violence is not and this is a very damning allegation. If the Plaintiff is so offended in FEB 2015 by this assault, was she not offended in OCT 2013? Why would one continue to work in an environment where one is assaulted?
14. Yan’s temper was explosive. As are many of the CEO’s in our industry. Her term is ‘explosive’, another might use the term, ‘passionate’.
17. Plaintiff attended a meeting where Home Depot demanded $4.0M in cash and Credits. Welcome to the DIY industry. Plaintiff states eventually Home Depot acknowledged discrepencies but continued to excert pressure on TCP to remit credits of $4.0M, apparantly to avoid disclosure of an internal problem at The Home Depot. One would assume the Plaintiff must know of an internal problem with Home Depot. Clearly she is airing internal issues and I am not sure of the legality of this. One can assume that Plaintiff has signed a non-disclosure, so how does this suit affect her NDA assuming there is one?
18. Yan inserted himself into the discussions and committed to Home Depot TCP would remit the $4.0M in credits. Yan is the CEO and knows the industry. He also knows the power of Home Depot. He is ultimately responsible for the business and unless I am missing something, this is his right. Yan’s job is to make these big strategic decisions.
22. Yan began to pressure TCP’s Chinese facility to increase production, lower cost, and improve margins. I am not aware of any CEO that sources product in China that does not push for lower costs to improve margins. Yan did not get to his prominent position in the industry by sitting back and accepting whatever terms the Chinese offered.
23. SEP 2014, 40,000 lamps were built prior to receiving UL approval. Finally, there is a legitimate breach. If this happened, it is serious.
24. After learning of objections, Yan stated, “Who do you think you are; I am running the company, who the fuck you do you think you are, this is my fucking company. “ Not sure why this is in here? Was plaintiff offended because the CEO used the F-bomb? I don’t think I ever worked for a CEO who did not occasionally use this word in the heat of the moment. Although 30% of the compay belongs to various stockholders, Yan and his family control 70% so it is understandable that he refers to the company as his. Note to Plaintiff: Investors usually prefer when the CEO has a sense of ownership.
25. Ultimately the product did not meet UL. It is unclear if the product ever shipped. If Yan knowingly shipped UL labeled product that did not meet UL, then he is in big trouble. However, it is not as damning If he built product betting that it would meet UL and it had to be reworked or scrapped.
28. Yan instructed various employees to specifically exclude Plaintiff from key business matters. I get this. The CEO has lost confidence in an employee and likely feels she is undermining the company and does not want her to be involved.
29. 900,000 units built that did not meet UL. This is a very serious allegation.
40. Yan screamed at, belittled and showed a general lack of disrespect for employees. Many employees labeled Yan to be a “bully”. I think the plaintiff erred and means a general lack of respect, not lack of disrespect. So things are not going well at TCP and the man who controls 70% of the stock is seeing his investment, likely his life’s mission, beginning to crumble. If I had lost that much money, I may raise my voice as well.
43. The audit commttee expressed concern that Yan committed to delivery dates that were not feasible. Welcome to the lighting industry.
Conclusion. If Yan sold the 40,000 lamps and 900,000 units and labeled them as UL, when they were not, he is in very big trouble. If he struck an employee, he is in big trouble. The Plaintiff would have been better served to focus on these three issues as complaining about profanity and being left out of decisions seems petty.
EdisonReport will continue to monitor the suit as it goes forward.