Steve Cohen Workplace Complaint Places MLB in Thorny Situation
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Steve Cohen’s imprint on the New York Mets has already been felt. On Thursday, the team Cohen purchased for $2.42 billion last fall acquired all-star shortstop Francisco Lindor and pitcher Carlos Carrasco from the Cleveland Indians. Mets fans, who have seen their storied franchise underachieve in recent seasons, have reason for optimism.
But clouding Cohen’s reshaping of the club is a recent New York Times report on workplace allegations brought against the 64-year-old billionaire. The allegations concern Cohen’s role as chairman and CEO of hedge fund Point72 Asset Management in Stamford, Conn., in 2019.
Last summer, former Point72 head of global macro Sara Vavra filed a discrimination complaint with the Connecticut Commission on Human Rights and Opportunities, a state agency charged with eliminating discrimination through enforcement of civil rights laws.
As reported by the Times, the complaint asserts that Cohen behaved in sexist ways and promoted a hostile work environment. He is accused of uttering both expletives and “a derogatory word for a woman’s genitals.” Cohen is also alleged to have repeatedly disparaged Vavra, vulgarly dismissing her as “so stupid” and “an idiot” and crudely saying her work product “sucked.” Cohen is portrayed as belittling other women who worked for the company as well.
Point72 fired Vavra in October 2019 and categorically disputes her allegations. The company insists she has made “numerous misrepresentations” about her employment.
A complaint, it should be stressed, is a series of allegations made by an accuser. It is not a finding of fault by a neutral party. Such a finding would only occur after a review of shared emails, subpoenaed documents and other available evidence as well as an assessment of witness recollections.
There is no known record of the commission reaching a favorable or unfavorable conclusion on Vavra’s complaint. The matter before the commission is also effectively closed. In December, Vavra requested that the agency relinquish its jurisdiction. By doing so, she gained the right to sue Point72 and Cohen. Instead of litigation, the dispute is now in arbitration. This is a private dispute resolution process that is sealed from public view and obligates the parties to uphold strict confidentiality.
The role of arbitration and workplace allegations is not unique to MLB owners. The NFL recently persuaded a federal judge in Maryland to relinquish review of a contract dispute involving owners of the Washington Football Team. That dispute, which is now before an NFL arbitrator, led to media reporting of claims that majority owner Daniel Snyder sexually harassed a female employee in 2009. Snyder denies the accusation and insists it is part of an extortion plot. The case had sparked sensational headlines in national publications but has gone quiet in arbitration.
MLB has declined to publicly address Vavra’s allegations. Whether the league investigates them remains to be seen.
Media reported on Vavra’s complaint in July, about four months before MLB approved Cohen as majority owner of the Mets in a sale from the Katz and Wilpon families. While MLB may not have known of the complaint’s details, which had been sealed until recent days, the league was surely aware of the complaint’s existence. It nonetheless approved Cohen. He also received the approval of 26 of the 30 MLB ownership groups.
A logical inference is that league officials and other teams’ owners deemed the matter insufficient to warrant Cohen’s rejection. Like other leagues, MLB performs extensive due diligence and background checks on prospective owners. Those measures are intended to ensure that a would-be buyer possesses sufficient financial resources to capably operate a franchise and meet payroll obligations. Background checks also assess whether the would-be buyer has a history of personal or legal controversies that might tarnish the league’s image.
MLB officials and attorneys might have asked Cohen about the Vavra controversy, and other workplace controversies, and simply found his explanation believable. Cohen’s record was not without blemish. In 2016, the U.S. Securities and Exchange Commission negotiated an agreement with Cohen that resolved an SEC administrative matter regarding his supervision over employees.
Although Cohen’s conduct before becoming an owner of an MLB franchise would not be grounds for MLB punishment, he was an MLB owner at the time of the alleged misconduct. He purchased an 8% stake of the Mets in 2012 and was approved by MLB as a minority owner.
Article II of MLB’s constitution contains explicit language authorizing the commissioner to take “punitive action” against an owner for an act deemed “not to be in the best interests of Baseball.” This sweeping language extends to personal conduct. Penalties range from a reprimand or exclusion from league meetings to a fine or suspension. The language of the rule does not distinguish an owner with a minority interest from one with a majority interest. MLB would thus have jurisdiction to investigate Cohen and, if warranted, punish him. If the league finds important discrepancies between Cohen’s depiction of the Vavra matter before he was approved in October and what is now known, it would be more inclined to take action.
Yet MLB’s ability to investigate is hampered by the ongoing legal process. Under normal rules of arbitration, both Vavra and Cohen would be barred from discussing the matter. This is true not only while the arbitration plays out but possibly afterwards: Arbitration matters often result in awards (rulings) that incorporate separate non-disclosure agreements. While awards can be challenged in court, judges are substantially bound by laws that limit their purview—and that limitation, in turn, typically deters parties from bothering to pursue court remedies. In other words, details of any Vavra-Cohen ruling might never be known by people beyond those who were directly involved.
The Times story comes at a time of advancement for women in baseball. The Boston Red Sox recently hired Bianca Smith, a graduate of Dartmouth College and Case Western Reserve University School of Law, as a minor league coach. She is the first black woman to serve as a coach for an MLB franchise. Last fall, the Miami Marlins hired Kim Ng as general manager. The former New York Yankees and Chicago White Sox assistant GM became the first woman to serve as GM of an MLB franchise.
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