In a lawsuit filed August 28 in the U.S. District Court for the Southern District of New York, former Barnes & Noble CEO Demos Parneros has charged the retailer with breach of contract and defamation of character. The suit contains numerous unflattering revelations about the inner workings of B&N, and includes the bombshell news that a deal to sell the company to another "book retailer” fell through in June.

Parneros was abruptly fired from B&N on July 3, for unspecified violations of company policy. He was let go without severance. In his suit, Parneros claims that the nature of his firing, coupled with the current employment environment, left the public to assume he was guilty of sexual harassment. He denies, however, that this was the case.

Claims in Parneros's suit indicate that his relationship with B&N chairman Len Riggio began to sour after an unnamed book retailer withdrew its offer to buy the company in June. According to the complaint, the retailer withdrew its offer after completing due diligence.

Following the collapse of the deal, Riggio, according to Parneros's complaint, felt he “no longer had a graceful exit from the company.” Riggio also believed, per the complaint, that the only way B&N could survive is if he stayed on, and ran the company. “After the deal fell through, Riggio became hostile to Parneros,” the complaint states, adding that after the deal fell through Riggio stopped communicating with Parneros and began giving direct orders to other members B&N's executive team.

At a July 2 meeting with Riggio and Scott Barshay, an attorney with Paul, Weiss, Rifkind, Wharton & Garrison, Parneros was told he was being fired for violations of the company’s sexual harassment policy for interactions with an executive assistant, as well as his mistreatment of CFO Allen Lindstrom. Parneros said the incident with the executive assistant was an “innocuous, less than five-minute conversation about vacationing in Quebec.” And as for his mistreatment of Lindstrom, he said he had treated the CFO the same as Riggio and that the board agreed Lindstrom was performing poorly.

In the complaint, Parneros accuses Riggio of engineering the firing “without cause,” so Riggio could maintain control of B&N. Parneros claims, furthermore, that the nature of the firing left him, as a headhunter called Parneros, "unhirable.” and that he was forced to resign from the Key Bank board, a post he held since 2014.

The lawsuit takes particular aim at Riggio’s management style, alleging that he set “an unprofessional tone at B&N.” The complaint includes a long list of disparaging comments Riggio allegedly made toward other executives. In addition to blasting Lindstrom as not being "a real CFO," the complaint alleges that Riggio called a former chief merchant “flawed” and potentially “schizophrenic.” The president of a B&N division was allegedly described as a “head case” by Riggio, and “dead wood." Parneros said that given the abusive corporate culture created by Riggio “the bogus nature of the allegations of cause for firing Parneros are even more obvious.”

The complaint demands that B&N pay Parneros the severance (over $4 million) he is due for being dismissed without cause, as well damages for loss of potential earnings, mental anguish and other punitive damages. The suit also seeks to make B&N clear Parneros' name.

In response to Parneros's suit, the B&N board issued a statement vehemently rejecting all the charges in it. B&N called the suit “nothing but an attempt to extort money from the Company by a CEO who was terminated for sexual harassment, bullying behavior and other violations of company policies after being in the role for approximately one year.”

The statement went on to defend Riggio’s conduct, calling the allegations contained in the complaint “replete with lies and mischaracterizations." It goes on to call Parneros "someone who, instead of accepting responsibility for blatantly inappropriate behavior, is lashing out against a former employer.”

The statement repeated that, advised by legal counsel, the board “unanimously terminated Mr. Parneros’ employment following a thorough investigation that revealed multiple examples of significant misconduct. Mr. Parneros not only violated his employment agreement, but also compromised the trust and respect that we strive to foster throughout our organization.”