With Activist Campaign Settled, Sexual Harassment Lawsuit Against Cedar Realty Trust Continues

As the “Me Too” movement was getting off the ground this past fall, an activist hedge fund campaign was underway to oust the president of Cedar Realty Trust (NYSE:CDR) a Port Washington, NY-based Real Estate Investment Trust that owns and operates nearly $670 million in primarily shopping malls located in the Washington DC to Boston beltway. While the dispute with the activist hedge fund, Snow Park Capital Partners, has been settled, what remains is a sexual harassment lawsuit that is approaching a pivotal moment in court.

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Cedar Realty
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A Brooklyn judge will soon decide if a sexual-harassment and pay-discrimination lawsuit filed by the former Cedar Chief Operating Officer Nancy Mozzacho, 53, against CEO Bruce Schanzer, 49, has merit to proceed.

Mozzacho claimed in a lawsuit filed November 2 that Schanzer “regularly leered” at women in the workplace and made inappropriate comments. In addition to calling Mozzacho “babe,” Schanzer alluded to comments about her breasts. With a Dunkin’ Donuts coffee cup on her desk, he allegedly said “I see you have double Ds today” and is accused of giving her unwanted, groping hugs.

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Mozzacho says that when she complained about the sexual harassment and a pay disparity she was fired as a result. She was terminated in February 2016 after approaching Cedar’s outside counsel to discuss procedures for reporting sexual harassment. She claims the meeting was abruptly canceled and she was terminated the next week.

Cedar Realty investigated the allegations in a 2015 probe by an external investigator, but the investigator ignored complaints from female employees who were being sexually harassed by Schanzer, Mozzacho alleged. The Wall Street Journal reported that one employee claimed that Schanzer asked her the color of her underwear. Mozzacho said in the lawsuit that charges against Schanzer were settled through payroll payments in a fashion that kept them a secret from investors.

Mozzacho had been a relative success story at the company, working her way up the ranks from director of leasing in 2003, to being promoted to vice president of leasing in 2004, and then the chief operating officer in 2014. She alleged in the suit, however, that she was paid a lower salary and received a smaller bonus than the company’s chief financial officer, despite a general practice in the REIT industry that the COO gets higher compensation than the CFO.

Cedar Realty , for its part, denies the charges. “Ms. Mozzachio’s lawsuit against Mr. Schanzer was filed nearly two years after the Cedar Board voted unanimously to terminate Ms. Mozzachio for cause, and Ms. Mozzachio only raised the issues outlined in her legal filing after her termination,” the company said in a statement to the Journal. They said the lawsuit is “a calculated maneuver to do an end-run around pre-existing arbitration and to harass and harm Mr. Schanzer.”

The sexual harassment issue became center stage at the height of an activist campaign to unseat Schanzer as CEO, who joined the firm in 2011. However, as part of a February 2018 settlement, Snow Park managing partner Jeffrey Pierce gave the firm absolution. “Based on information provided to us by Cedar regarding the allegations against Bruce Schanzer and other members of the management team, I believe that the Board thoroughly investigated the claims and am comfortable with its findings that the allegations are without merit,” he said in a statement.

Mozzacho, however, isn’t backing down. “I will not be intimidated or deterred from my beliefs that a safe workplace for female employees is the minimum a publicly traded company and the board can provide to workers,” said Ms. Mozzachio said in a statement to the Journal.

The dispute comes as Schanzer is facing another lawsuit accusing him of assaulting a man while waiting for his car at an October 2015 wedding. The complaint, filed in Bergen County Superior Court in New Jersey in January 2017, Schanzer alleged screamed at the plaintiff’s 57-year-old mother-in-law, accusing her of cutting the line. The plaintiff stepped between Mr. Schanzer and his mother-in-law, telling him to calm down, but Schanzer allegedly head-butted him, causing a nose surgery and impacting his breathing.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com