ICN Settles Panic Harassment Suits
ICN Pharmaceuticals Inc., one of Orange County’s most prominent corporations, said Tuesday that it settled two lawsuits that charged its internationally known Chairman Milan Panic had sexually harassed two female employees.
The confidential agreements, which the company hopes will finally end years of allegations surrounding Panic’s behavior, came late Monday on the eve of a trial in one of the cases.
The settlements bring to four the number of lawsuits that ICN and Panic--who briefly served as prime minister of Yugoslavia in the early 1990s--have settled with female employees in recent years.
Settlements with two other female employees were reached before they resulted in lawsuits.
ICN, located in a black glass building on the San Diego Freeway in Costa Mesa, is a fast-growing drug manufacturer whose global empire includes sizable operations in Eastern Europe.
In addition to the harassment claims, Panic, a Yugoslav native who came to the United States in 1956, has been accused of violating federal securities laws by both regulators and shareholders. All but one of those cases has been settled, and Panic has denied any wrongdoing.
But the company has repeatedly overcome those obstacles to become a successful player in the increasingly competitive pharmaceutical industry.
Analysts predicted Tuesday that the settlements, which will be paid by the company, will not materially hurt ICN’s bottom line.
Eugene Melnitchenko at Sutro & Co. said the shaky outlook for ICN’s business in Yugoslavia and Russia--roughly 40% of its revenue--remains investors’ biggest concern.
“The worries remain the same,” he said. “In Yugoslavia, it’s sanctions and insane old people running the country. In Russia, it’s the financial crisis and the ruble devaluation.”
Earlier this year, ICN took a $130-million charge to account for money it is owed by the Yugoslav government, which defaulted on $39 million in notes payable for drugs and supplies sold to state medical institutions.
ICN shares fell $1.83, to $22.38, Tuesday in New York Stock Exchange trading.
Both Sides Insist They Would’ve Won
Both Panic and the women insisted Tuesday that they would have prevailed at trial and continued to trade barbs in interviews and in strongly worded written statements.
At a news conference at ICN’s headquarters, the 68-year-old Panic made a brief appearance and insisted that he did “nothing unwanted” with any of his employees.
“We have 12,000 women in this company and we have six cases against me,” he said. “I am a perfect target. In none of the cases has it been proven that I did anything wrong.”
Philip Kay, the attorney for former human resources director Mary Martinelli--whose lawsuit was set to go to trial Monday--and another plaintiff, Michelle McKenney, said nothing has been proved in court because ICN and Panic settled the cases before a jury could hear them.
In their lawsuits, both women contend that they rebuffed sexual advances made by Panic and were retaliated against as a result. As part of her settlement, McKenney resigned.
Martinelli said that the settlement offer was “too good to pass up.”
“Although I wanted a jury to see the parade of women who I believe had suffered harassment like I did, I realized that ending this nightmare for myself and my family was more important,” Martinelli said in a statement.
Kay said that ICN and Panic settled to spare themselves from the embarrassment of a high-profile trial and were willing to pay a “substantial” amount.
“When a defendant pays this kind of settlement, [guilt] is implied in the amount,” Kay said.
A jury of eight women and four men had sat in a corridor of Orange County Superior Court for more than a day waiting for opening arguments in the case to begin. Serious settlement talks began after the jury was selected, Kay said.
ICN attorneys said the agreement came about because the Martinelli trial was expected to last at least five weeks, which they say would have made it impossible for Panic to continue to run the company.
ICN’s board had formed a special committee of directors to oversee its handling of the sexual harassment allegations against Panic.
Director Stephen Moses continued to express confidence in Panic on Tuesday.
“We had done a thorough investigation prior to this point,” Moses said. “[Panic] was completely exonerated and has the complete confidence of the board.”
Panic was to stand trial on charges that he sexually harassed Martinelli, who made $101,200 a year as ICN’s human resources director. Part of her duties included dealing with sexual harassment claims that other female employees of ICN had lodged against Panic.
Martinelli claimed that Panic first began pressing her to have drinks with him in 1989 when he became her direct supervisor. She alleges that Panic harassed her for more than six years. She was seeking unspecified amounts for lost pay and benefits, legal expenses and general and punitive damages.
Martinelli further claimed that Panic’s treatment of her left her ill and depressed and claimed that she felt compelled to quit her job in November 1996 after Panic screamed at her over her job attendance.
She also alleged that other ICN officials had known of Panic’s unwanted advances since 1992, but didn’t take any measures to stop him even after other former employees filed harassment cases.
“She clearly wanted to go to trial,” Kay said. “It was they that decided at the last minute to ask for more time. They were waiting to see if she would go through with it and she was. We felt we had an excellent case. We had tested the case through a mock trial and the results had been very favorable.”
Women Delighted to “Send a Message’
ICN’s attorneys said they were equally confident.
“We were ready to try this case,” attorney Catherine B. Hagen said. “We wanted to vindicate the chairman and we are confident that we would have prevailed.”
McKenney, whose trial was scheduled to begin in January, contended that after she rebuffed advances from Panic, she was denied a promotion and transferred to an office at ICN that had neither a telephone nor e-mail. She had worked for the company as an executive secretary but left ICN as part of the settlement.
“I’m leaving ICN with my dignity and enough money to make Milan Panic think twice before doing to other women what he did to me,” McKenney stated.
Martinelli was not in court Tuesday when her settlement was announced by Judge Raymond J. Ikola and could not be reached for comment. But Kay said both of his clients are satisfied and eager to put the experience behind them.
“They are delighted because these were substantial settlements, significant enough to send a message to this company internally that they need to do something about sexual harassment other than to continue to deny its existence,” Kay said.
At their news conference, ICN attorneys insisted that sexual harassment is not a problem at the company.
Panic, who was divorced from his wife, Sally, last December after 18 years of marriage, insists that he is being unfairly maligned.
“We have a lot of social events,” Panic said. “Somebody hugs me, I’m not going to push them away. . . . I don’t believe I have ever done anything that should be considered sexual harassment. This is sort of embarrassing for a guy like myself.”
Panic said that “women are victims of our legal profession” and are being encouraged to file sexual harassment claims and lawsuits more than ever before. He predicted there would be less of that type of litigation in the coming years.
“The greed is unfortunate,” he said.
Times staff writers Barbara Marsh and David Haldane contributed to this report.
* WOES ON OTHER FRONTS: ICN stockholders still must worry about troubles abroad and with federal regulators. C1
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Panic’s Accusers
ICN Pharmaceuticals late Monday settled two sexual harassment lawsuits against the company and Chairman Milan Panic. Since 1993, four women have lodged complaints against Panic, who maintains he engaged in no wrongdoing in any of the cases. A look at the complaints:
1997
* Michelle McKenney, executive secretary
Settled Monday; terms not disclosed
1996
* Mary Martinelli, former human resources director
Settled Monday; terms not disclosed
1995
* Debra Levy, Panic’s former secretary
Suit settled in 1996; ICN board required Panic to pay the full amount, which wasn’t disclosed
1993
* Colleen James, former trade show manager
Suit was settled in 1993; terms not disclosed
Source: Court records
