Leaders of Woodstock Foundation Board sue fellow trustees

Complaint claims mistreatment of employees and mismanagement at Woodstock Inn and Billings Farm

By Mike Donoghue, Standard Correspondent

Copyright 2023 The Vermont Standard

The chair and vice chair of the Woodstock Foundation Board were secretly removed from their leadership posts after they attempted to investigate employee complaints about workplace problems, sexual harassment and discrimination, and malfeasance by officers and management at the Woodstock Inn & Resort and Billings Farm & Museum, according to a newly filed lawsuit in Vermont Superior Court.

Chair Ellen C. Pomeroy and Vice Chair Salvatore Iannuzzi, who still remain as board members, filed the civil lawsuit both as individuals and derivatively on behalf of the Woodstock Foundation Inc. and Woodstock Holdings LLC.

Board members James S. Sligar, Michael D. Nolan, John T. Hallowell, Douglas R. Horne and David M. Simmons, along with both the Foundation and the Holding entity are named as defendants in the 31-page civil lawsuit filed late last Friday afternoon.

The lawsuit maintains the five individual board members named as defendants went beyond their legal power or authority to take steps on behalf of the Foundation, including during two improperly warned meetings. The plaintiffs want the state court to reverse the unauthorized actions.

The plaintiffs also seek to have the defendants resign immediately as trustees from both boards and if they hold any office.

The Foundation and Holdings play a major role in the region through the operation of the Woodstock Inn & Resort, the Woodstock Country Club and the Saskadena Six Ski Area (formerly Suicide Six), along with the Billings Farm & Museum.

The lawsuit insists the defendants took their actions in an effort to terminate a legitimate investigation by Iannuzzi and Pomeroy “into allegations of mismanagement and misconduct by defendants Hallowell, Horne and Simmons and various managers at both the Resort and Billings Farm.”

The defendants also attempted to retaliate against former employee, Anna Berez, the initial primary whistleblower, by trying to prevent her from communicating with employees at the Resort and Farm, the lawsuit said.

Management instructed employees in November to call police if Berez or Iannuzzi were spotted on Billings Farm property, the lawsuit said.

Simmons, acting on behalf of all the defendants, attempted to silence Berez by canceling her health insurance, the lawsuit maintains. The defendants also caused the Billings Farm not to pay the three-month severance pay promised to Berez thus exposing the Farm and Foundation to civil liability under Vermont’s Fair Employment Practices Act, the lawsuit asserts.

Pomeroy and Iannuzzi are seeking to overturn the actions of the other five board members and also to hire an independent law firm to finish the investigation they started, but was terminated by those other foundation board members.

The lawsuit spells out claims at the Resort for issues such as unsafe work conditions, racially insensitive language, and the mistreatment of employees, especially women and minorities.

Over at the Billings Farm, a manager reportedly intimidated other staff members, including telling Berez he knew how to bury a body where nobody could find it, the lawsuit said. In another instance, a dead rat was left in an unidentified employee’s personal vehicle, the lawsuit stated. It noted management took no action.

The lawsuit states the defendants used a scheme to prevent Pomeroy and Iannuzzi from:

• Investigating misconduct and mismanagement at the Woodstock Inn & Resort and Billings Farm & Museum
• Stopping misconduct and mismanagement at the Resort and Billings Farm and
• Obtaining reimbursement from those persons who obtained pecuniary benefits and were unjustly enriched through misconduct and mismanagement at the Resort and Billings Farm.

Sligar, the board’s interim chair, issued a brief statement on Tuesday evening on behalf of the Foundation through Norwich lawyer Geoffrey Vitt.

“We are aware of the complaint unfortunately filed by two of our Board members. The trustees and directors of the boards for the Woodstock Foundation and WRC Holdings are aware of the important roles the Woodstock Resort, Billings Farm and Museum, and their related holdings contribute to our community,” the Foundation statement said.

“The well-being of our employees and community is paramount. Over the course of the past three months, we have been conducting an independent investigation related to complaints made by several employees. The Foundation Board will review the findings of that investigation, when completed, and take appropriate actions,” the statement concluded.

Multiple attempts to reach the five trustee defendants this week by phone and email for comments were unsuccessful. Their lawyer, Christopher Roy of Downs Rachlin Martin in Burlington, also did not respond to email and phone messages before the Vermont Standard’s deadline.

All defendants will each have 30 days to file at the Woodstock courthouse their written responses to the specific claims.

Hartford lawyer Michael F. Hanley, who is the lead local counsel for Pomeroy and Iannuzzi, was unavailable for comment up to press time. Andrew Levander and Elkan Abramowitz, who are with two prominent New York City law firms also have been retained by the plaintiffs, but could not be reached.

Complaints surface

Iannuzzi, who is a part-time Woodstock resident, received numerous, credible complaints in May 2022 from multiple employees, including Berez, alleging misconduct by officers, managers and employees of the Resort, according to court papers.

In an interview with the Vermont Standard this week, Berez said she has always tried to help others in need, especially when she saw a wrong.

“You stand up for people that don’t have a voice,” she said about trying to improve conditions at the Inn and the Farm.

Berez, 40, spent seven years working between the two places and said she is concerned for those that remain behind and for those coming in the future.

“The vision for where the Inn and Billings could go are positive things,” she said. Berez said it is important to ensure the Rockefeller legacy continues in Woodstock.

Iannuzzi alerted Pomeroy about the complaints on June 29, 2022.

“All of the employees who complained believed the Trustees condoned the misconduct. Almost all of the employees feared retaliation by the Trustees and management,” the lawsuit stated.

Employees were blocked from having access to senior management, who failed to communicate with employees, the lawsuit said. Anybody complaining was subjected to retaliation, the lawsuit said.

Iannuzzi learned the complaints were wide-ranging and eye-opening. The lawsuit said they included:

• The Resort paid employees significantly less than comparable organizations compensating their workers;
• Employee compensation was inconsistent relative to job responsibilities;
• Female employees were denied access to senior management positions and were often paid less than their male counterparts;
• Female employees were subjected to recurrent, offensive sexual comments and behavior by both members of management and co-employees;
• Management tolerated a human resource training manager’s frequent use of the “N word;”
• Employees experienced harassment if they were lesbian, gay, bisexual, transgender or queer;
• Employees were encouraged by management to overserve alcohol to guests that were clearly intoxicated, despite Vermont law and training against the practice.

Among the misconduct cited in the lawsuit was management tolerating a “purportedly consensual sexual relationship between a manager and a young woman he supervised.” Management also tolerated sexual activity between that manager and the employee at the manager’s workplace at the resort, the lawsuit said.

Instead of firing the manager involved with the female subordinate, management promoted the man and provided a pay raise, the lawsuit said. Management also attempted to promote the woman to a position for which she was unqualified, the lawsuit claimed.

The plaintiffs also contend management tolerated an ineffective human resource function, leading employees to mistrust management and the Trustees. Senior Management tolerated managers who were ineffective and failed to provide leadership, according to the lawsuit.

Pomeroy and Iannuzzi agreed the problems were serious enough that he should investigate the complaints.

During the course of his investigation, Iannuzzi said he learned the substance of the complaints to the Human Resources Department were never included in the personnel file of the respective employee, the lawsuit said. The plaintiffs also learned the concerns by workers were often shared with the target of the complaint — leading to retribution against the employee, Pomeroy and Iannuzzi said.

“Iannuzzi found that most, if not all of the employees’ allegations of misconduct, mismanagement and retaliation were true, but none of the employees’ allegations had been shared with the Board of Trustees,” the lawsuit said.

Pomeroy also reached the same conclusion that most if not all the complaints were true, the lawsuit said. Iannuzzi said he wanted a meeting of the full board to address the complaints from the employees.

Pomeroy suggested she and Iannuzzi first meet with Horne, who was the chair of the Resort before Hallowell took over. The three had multiple conversations about the complaints, the lawsuit said.

During one phone call, Pomeroy said that she told Horne that good employees had left the Resort, and more were planning to depart.

“Maybe they should just leave,” Horne reportedly responded, according to the lawsuit. The lawsuit said Horne asked Iannuzzi to not speak directly to Hallowell. Instead, he would speak to him.

According to the lawsuit, the plaintiffs had not received reports from Horne by mid-July 2022 and Iannuzzi called Hallowell to outline the complaints from employees.

In late July 2022, the lawsuit said that Pomeroy and Iannuzzi held a Zoom meeting with two defendants, Hallowell and Horne, along with William Simpson, who was on the Holdings board, and Courtney Lowe, who was president of the Resort at the time but has since left.

As the meeting concluded, the lawsuit said that Pomeroy asked Hallowell and Horne to step back and let Iannuzzi coach Lowe. Pomeroy and Iannuzzi later met with Lowe and Elaine Olson, the Resort’s Controller, in Woodstock.

According to the lawsuit, Lowe indicated management had been trying to maximize Resort profits, while Iannuzzi explained employee compensation was a pressing issue. Iannuzzi presented evidence showing greater compensation being paid at a competing resort. Within a week, Lowe and Olson proposed $1 million in employee compensation increases, but Iannuzzi reviewed the salary data with them and they agreed to pump in another $200,000 for pay increases.

It was about the same time, the lawsuit said Iannuzzi learned defendants Horne and Hallowell had dispatched the Resort’s maintenance staff to complete construction of a home at 11 The Green in Woodstock owned by the Foundation, but used by Hallowell and his family, rather than have the staff work on maintaining the Resort facilities.

Iannuzzi also learned the Resort management did not have a periodic maintenance schedule for the Resort’s equipment and real property, and it deferred maintenance and allowed equipment and property to fall into disrepair, which had the effect of making the Resort profits appear greater, the lawsuit said.

“Iannuzzi also learned that Resort management required employees to work in unsafe environments where they faced an unreasonable risk of injury or death,” the lawsuit said.

Soon after, Pomeroy and Iannuzzi learned Hallowell, with Horne’s knowledge, laid off “a very substantial majority of the Resort’s employees during the COVID pandemic without obtaining permission from the Board and without informing the Board,” the lawsuit noted.

Audit woes

The lawsuit says that during his investigation Iannuzzi also learned audits of the financial reports for the Resort were not completed for three years — a clear violation of Foundation policy.

Sligar, the trustee in charge of the Audit Committee, failed to report the violation to the Board of Trustees, the plaintiffs said. Pomeroy and Iannuzzi later learned one audit did get completed, but the status of the other two remained unclear, the lawsuit said.

Trustee William Simpson resigned as a member of the Holdings board in October 2022, telling Pomeroy and Iannuzzi he was disappointed with management’s failure to make appropriate disclosures to the Board, the lawsuit said. It adds that Simpson was also disappointed with the failure of Horne and Hallowell to include him in any meaningful way in the Resort’s operation despite his extensive experience in hospitality management.

Problems at Billings too

The lawsuit said that in addition to intimidation, other employee complaints were received from Billings Farm similar to complaints from the Resort, and they also included:

• Management tolerating self-dealing between employees and the Billings Farm, including at least one instance of an employee selling cattle feed to the farm, the lawsuit said. It noted other related-party transactions also happened with no disclosure to the board.
• Management tolerating and failing to manage employees who were divisive, broke rules, and were disrespectful to other farm employees and even to visitors.
• Management also engaged in divisive behavior, pitting staff against one another. Employees were initially advised and later directed not to speak to trustees.

Iannuzzi and Pomeroy found the allegations credible and the Billings Farm management took no action even when directed by Iannuzzi in an effort to protect employees from possible physical and emotional injury, the lawsuit said.

The Trustees’ reaction

In advance of the Annual Meeting in November, Pomeroy, as chair, circulated to the board a “Trustees Statement of Intent” to vote for a slate of trustees at the Annual Meeting that did not include Horne and Hallowell. All the trustees, including the two non-renewed defendants, signed the document, the lawsuit said.

Trustees James S. Sligar, Michael D. Nolan, John T. Hallowell, Douglas R. Horne, and David M. Simmons, without notice to Pomeroy or Iannuzzi, planned to have a “Special Meeting” of the Board of Trustees on Nov. 11, 2022 — four days before the scheduled Annual Meeting, the lawsuit said.

The defendants also failed on purpose to notify Trustee John B. Osborn about the special meeting, the lawsuit said. Osborn never attended and was not named as a defendant.

Those attending the Nov. 11 Special Meeting canceled the duly warned Annual Meeting scheduled for Nov. 15, the plaintiffs said.

In other action at the meeting, the five trustees went after Pomeroy, Iannuzzi, and one of the primary whistleblowers, Anna Berez, who began work at the resort in 2015 and eventually moved to the farm in 2020.

The lawsuit says the defendants:

• Appointed a special committee consisting of Nolan and Sligar to hire and oversee an outside lawyer to investigate corporate irregularities and whistleblower complaints relating to Iannuzzi and to determine potential exposure of the Foundation and Inn to possible lawsuits.
• Removed Iannuzzi from the Holdings board and suspended him from the Foundation board and his role as vice chair, pending the investigation by outside counsel.
• Blocked both Iannuzzi and Berez, the whistleblower, from access to the business premises of the Foundation and Inn.
• Removed, without explanation, Pomeroy as chair of the Foundation and Holdings company. They also appointed Sligar to chair the Foundation.

According to the lawsuit, the Foundation bylaws do not provide any mechanism for election of a chair at a special meeting — and mandates the election can only happen at the Annual Meeting. The lawsuit noted it was one of a number of improper steps by the defendants that were “ultra vires” — a Latin phrase for doing something beyond authority.

There also is no mechanism or authority for a suspension either, the plaintiffs said.

The lawsuit also explained special meetings can be called only by the chair, or by the secretary upon a written demand of one-fifth of the entire board of trustees. Neither happened, it said.

Hallowell, Horne and Simmons, all who were under investigation by Pomeroy and Iannuzzi for possible misconduct and/or mismanagement, participated in the special meeting “despite having both personal and pecuniary interests in the matters voted upon at the meeting,” the lawsuit said.

The defendants also tried to elect Angela Ardolic as a trustee at the special meeting, but the bylaws state new trustees may only be elected at annual meetings, the lawsuit said.

The lawsuit said Nolan and Sligar subsequently told the Leadership Committee of the Resort that the board had hired the Provenzano Law Firm in New York City to do an investigation in Woodstock.

Sligar, Nolan and Simmons called a meeting for all employees at the Billings Farm on Nov. 12, 2022, and reported Pomeroy and Iannuzzi “are out of the picture,” the lawsuit said. The defendants also said they had commissioned an outside law firm to investigate both of the plaintiffs, and the employees were told the purpose of the meeting was “to make you feel better,” the lawsuit said.

During the meeting, the lawsuit said the employees were told changes were being made because of comments and allegations made under the Foundation’s “whistleblower policy.”

The lawsuit maintains the comments by the defendants violated the Foundation’s whistleblower policy, which expressly provides confidentiality.

It was not long after the Nov. 12, 2022 meeting the Provenzano Law Firm in New York City circulated a notice to about 100 employees telling them to preserve all texts and emails, the court papers noted.

While Provenzano was hired for the outside investigation, the lawsuit notes the firm also has purported to act on behalf of the defendants in connection with the claims in the lawsuit.

Sligar and Nolan purportedly held another special meeting on Nov. 23, 2022, to try to repeat the actions taken during the Nov. 11 meeting, including electing Ardolic to the board and making Sligar interim chair.

The plaintiffs maintain the meeting was also improperly called and all motions were invalid. The lawsuit said it had been called because the defendants thought Pomeroy would not call a special meeting, but in reality, she had notified the board of a special session for Nov. 29.

The legal claims

The plaintiffs filed a seven-count lawsuit — with two counts claiming the five defendants breached their fiduciary duties to the Foundation and the Holdings. There also is a third claim of fraudulent misrepresentation for not disclosing material information to all Foundation board members when obligated, the lawsuit said.

Another count maintains the defendants were involved in defamation by making written and oral statements designed to hold Pomeroy and Iannuzzi “up to hatred and/or contempt, and/or caused them to be shunned or avoided.”

One count filed only against Sligar and Nolan, who are both lawyers, claims legal malpractice. The lawsuit says they provided legal advice to the Foundation, the Holdings, and the trustees of both organizations. It maintains the advice offered was inconsistent with the standard of care other lawyers in Vermont would have provided.

The lawsuit also seeks to block the defendants from obtaining reimbursement of their legal fees for the actions leading to the lawsuit.

The plaintiffs also seek dismissal of the Provenzano Law Firm of New York City, which the defendants hired. The lawsuit proposes moving forward by hiring a disinterested law firm to conduct an independent investigation into the claims.

One count also seeks removal of directors by the court. The filing said the defendants engaged in fraudulent, dishonest conduct or gross abuse of authority or discretion concerning the Foundation and/or Resort and their removal was in the best interests.

The plaintiffs said they want a jury trial and will be seeking punitive damages

The background

The not-for-profit Foundation was created by Laurance S. Rockefeller and Mary French Rockefeller in 1968 to provide philanthropic support to the Woodstock community and to own and operate Billings Farm and Museum. It was set up for charitable and educational purposes.

The Foundation and Billings Farm partner with the Marsh-Billings-Rockefeller National Historic Park in Woodstock on a variety of projects and the Foundation provides financial support for some maintenance expenditures at the park, court papers note.

The farm, which is about a 10-minute walk from the Woodstock Inn, is a recreation of a 19th century dairy farm and is used to educate the public about the agricultural history of rural Vermont. It highlights the work of George Perkins Marsh, Frederick Billings and Laurance S. Rockefeller.

The Rockefellers provided the initial funding for the Foundation’s substantial endowment. The current value for the benefit of the Billings Farm is estimated between $40 million and $43 million, the lawsuit notes. The endowment to benefit the Park is estimated at between $13 million and $15 million, court records show.

The Woodstock Holdings LLC is a for-profit wholly owned subsidiary of the Foundation and among other things, it owns and operates the Woodstock Inn & Resort. Besides the Inn, with 142 guest rooms and multiple dining facilities, the Resort includes the Woodstock Country Club; the Saskadena Six Ski Area (formerly Suicide Six); and an athletic club with tennis and pickleball courts, swimming pools, and other various fitness facilities. There is also a 3.5-acre organic garden providing fresh food for the Resort’s dining facilities.

The Foundation and/or Resort also own a substantial amount of commercial and residential property in Woodstock. Some are available to guests of the Resort, but most provide housing for employees of the Foundation and Resort.