Original Mike's Employees Sue Owner Michael Harrah For Sexual Harassment

SANTA ANA, CA — An Orange County Superior Court judge Friday indicated he would deny a motion to dismiss sexual harassment claims filed by five former employees of Original Mike's restaurant Santa Ana, which is owned by wealthy developer Michael Harrah.

Orange County Superior Court Judge William D. Claster was skeptical of arguments by Harrah's attorney, Will Klatte, that the lawsuits can't go forward because the management company for the restaurant lapsed into bankruptcy.

At issue is if Harrah's other companies that have been subsidizing Original Mike's -- which according to Harrah has lost about $200,000 annually -- can be held liable.

Claster issued a tentative ruling, discussed in court Friday, that said because Harrah used money from his other companies to pay Original Mike's bills then the other corporate entities would be held liable for any damages if the former employees prevail at trial, set for Dec. 4.

Claster tentatively ruled that Harrah filed for bankruptcy just days before a previous trial date to dodge the case going before a jury.

Klatte argued that the Original Mike's bankruptcy was done in good faith because if it had not been filed in good faith the federal court would have rejected it.

"But how would they know all of the things before me," Claster replied, referring to the financial status of Harrah's real estate business and how he paid his bills for Original Mike's.

Attorney Jeff Spencer, who represents the employees that allege they were fired when they claimed sexual harassment and wage violations, said, "I think Mr. Klatte is conflating two issues," referring to the bad-faith rules in a federal bankruptcy court with the issue before the state court of an "alter ego" legal theory.

"They manipulated the bankruptcy to create an inequitable result here," Spencer said, adding it was a tactic to deny a recovery of damages for the plaintiffs.

Claster agreed.

"All of these entities are essentially a piggy bank" for Original Mike's, the judge said. "There's no documentation. The money just flows in and out... It's hard not see it as an integrated entity."

The bankruptcy declaration appeared to have been done to prevent the lawsuit from going forward, Claster said.

Claster said he would again review some case law Klatte cited before finalizing the ruling Friday or by Monday.

A class action lawsuit has also been filed against Harrah for denial of work breaks and failure to pay overtime, Spencer and his partner in the case, Bradley Gage, said.

So far, there are five alleged victims of sexual harassment, Spencer said. Most of the allegations involve a general manager, Juan Orozco, accused of groping employees and refusing to give them shifts if they didn't line up to give him a kiss and a hug at the end of the day, the attorneys said.

When the women refused Orozco's advances or complained they were fired, the attorneys allege.

They argue Harrah must be held liable because he was made aware of the allegations and did nothing to correct the alleged harassment. Orozco, the attorneys said, is still working at Original Mike's.

By PAUL ANDERSON, City News Service; Photo: Shuttersock