Natalie Cedeno, FriendFinder's former director of human resources, was fired in January without cause, she says, after a series of run-ins with management over practices she believed were improper or illegal.

Cedeno claims the atmosphere at the company changed substantially after Penthouse Media Group acquired Various Inc., the operator of Adult FriendFinder and other websites, in 2007 and changed its name to FriendFinder Networks. Various was buttoned-up, she says, despite operating websites where users planned hookups. Penthouse, by comparison, was pure frat-boy raunch — an attitude which culminated in an incident where a Penthouse Pet draped her boobs on an unwilling female employee in a staged photo meant to humiliate her.

There's more. The complete lawsuit is included below, but here are the highlights — or lowlights:

25. In or about April, 2008 plaintiff received complaints regarding racist comments concerning employees and prospective employees being made by the company's Controller, Al Mercado. Mercado made racially disparaging comments regarding Indians, Asians and people whose spoke English as their second language, which he admitted to Plaintiff. Plaintiff met with and counseled Mr. Mercado on three separate occasions, yet his discriminatory conduct continued. The complaints regarding Mr. Mercado's racially disparaging comments were received from Accounting Supervisor, Brinda Calori who had asked to be given a new assignment because she was distressed by Mercado's conduct. Plaintiff went to Carmela Monti and recommended that Mercado be discharged. Monti refused to terminate Mercado and instead ordered that Ms. Calori be terminated. Plaintiff objected to Monti's decision to terminate Ms. Calori and complained to the Vice-President of Finance who refused to become involved. Plaintiff is informed and believes and thereon alleges that Ms. Calori has filed a complaint with the EEOC for retaliatory discharge resulting from her complaints.

28. In May 2008 FriendFinder brought two Penthouse Pets and a male model into the Sunnyvale office to serve ice cream to the employees. The Pets were dressed in revealing attire that caused a female supervisor to complain that their presence and the fact that they were "porn stars" made her so uncomfortable that she would stay in her office away from this activity. The Pets went up to the supervisor's office and one of them placed her breasts on the employees head while two other employees' took pictures. The supervisor came to Plaintiff's office in tears. She was visibly shaken and upset and informed Plaintiff that she was afraid the photos would be put on the Internet. Plaintiff had previously telephoned Carmela Monti, informed her that the Pets were pinching the nipples of the male employees, rubbing their bare chest and inappropriately touching staff, and asked that Monti allow her to have the Pets removed from the office. Monti had refused Plaintiff's request and after the incident involving the supervisor Plaintiff called Monti again, asking that the Pets be removed because their behavior violated the company's sexual harassment policy. Monti again refused Plaintiff's request that she be authorized to direct the Pets to leave the office. COO Tony Previte appeared supported Monti's decision, stating that the employee who complained was a "trouble maker."

39. In or about August or September, 2008, the Chief Technology Officer (CTO) of the Las Vegas office, Jason Rasberry, made inappropriate sexual comments concerning a female employee (TE). The CTO said to 5-6 male coworkers in the presence of TE (the group was standing together on a smoke break) "I've had seen TE naked and her breasts are too small." The CTO admitted having made the comment. The CTO had a history of previous misconduct in the workplace for which he had received disciplinary action. Prior to this incident the CTO had asked a male applicant who was interviewing for a position in the company's Technology Department to "chose any item and he would have one of the girls on cams.com insert it into her vagina."

FriendFinder appears to be facing severe financial trouble. The company filed for a $460 million public stock offering in December, in an effort to pay off more than $400 million in debt incurred during the Penthouse acquisition. That IPO has yet to happen. But the stock market remains unfriendly to IPOs, and FriendFinder has defaulted on some of its debt, according to a new SEC financing. A tipster tells us the company recently laid off eight marketing staffers in an effort to cut costs. And top executives seem to disagree on whether the company can afford to keep publishing the print edition of Penthouse. (FriendFinder's corporate website now softpedals the company's porn business, highlighting G-rated social networks like BigChurch.com instead.)

Cedeno v. FriendFinder - Get more Legal Forms

Natalie Cedeno, the company's former HR director, says that company executives retaliated against her for pointing out violations of labor laws. She was a top executive at the Internet side of the business, deeply involved in its operations for eight years, before FriendFinder fired her without cause in January, she says. She claims the company then tried to withhold the two years of pay she was owed under her contract unless she agreed to stay silent about FriendFinder's misdeeds — a move her lawyer characterizes as "extortion." Cedeno plans to file complaints with the Equal Employment Opportunity Commission and California's Department of Fair Employment and Housing next month.

And a juicy complaint it will be. FriendFinder Networks used to be called Penthouse Media Group before it acquired Various Inc., the operator of Adult FriendFinder and other online personals sites, in 2007 for $500 million. While they're both porn companies, the office cultures of Florida-based Penthouse and Silicon Valley-based Various Inc. — where Cedeno worked before the merger — couldn't have been more different. That became obvious on May 2, 2008, when the ex-Penthouse executives, now in charge of the combined business, decided to ship in a passel of Penthouse Pets to the old Various offices.

When management announced that the venerable porn magazine's stable of nude models would be stopping by the office to serve ice cream, one female employee objected, as Cedeno tells the story. When they arrived, one of the scantily clad Pets made a beeline for the dissenter. "They came into her office and placed her breasts on her head in an attempt to humiliate her, and they had someone ready to take pictures," Cedeno says. The employee quit soon after the incident.

The evening before Cedeno was terminated last month, she says she brought up at a meeting of executives an employee who had charged thousands of dollars in lapdances to the company — an expense the company's pre-Penthouse management wouldn't have tolerated. "The president laughed and said the CEO had paid for lapdances for investment bankers with company money last weekend," Cedeno says.

But wait a second: Aren't we talking about a company whose main product is porn? What are a few workplace hijinks at a business which makes money off of naked ladies? Well, there's much more than Cedeno's pay at stake. FriendFinder filed to go public last year. It desperately needs the $460 million it hopes to raise in an IPO in order to pay down $420 million in debt. If the company has legal problems and labor issues beyond what it disclosed in its SEC filings, its executives could face heavy penalties, and the IPO would likely be scotched.

FriendFinder Networks CEO Marc Bell did not return a message left requesting comment on Cedeno's allegations. The SEC restricts what companies in registration for an IPO can say publicly about their business outside of regulatory filings, a requirement known as the "quiet period."

According to Cedeno, Various operated Adult FriendFinder and other X-rated adult sites for seven years without drawing a single sexual-harassment lawsuit from employees. The company was as buttoned-down as nearby NASA contractors. Office rules restricted employees from posting any photos on office walls, or even having naughty screensavers. Cedeno says the company's longtime postman had to ask her, after six years of delivering mail, what the company actually did. And founder Andrew Conru, who took no venture capital and therefore owned almost all of the company, is famously mild-mannered. (The raciest he gets: He once told a magazine he'd had a ménage-à-trois.)

Valleywag had previously heard rumblings of discontent at the company. Over the summer, Anthony Previte, a Penthouse executive who was COO of the company, reportedly prompted a mutiny among the Sunnyvale employees by trying (and failing) to replace most of the operations team. We also heard of a messy firing in the sales department. But that was just the tip of the iceberg, according to Cedeno.

Everything changed after Penthouse bought the company and changed its name to FriendFinder Networks, she says. Within four weeks, FriendFinder had its first labor complaint, and soon drew two more. The company's former controller plans to file an age-discrimination lawsuit, Cedeno says.

Cedeno says new management was unresponsive to her concerns. When she pointed out violations of overtime law, the company's VP of operations emailed her, "This garbage stops now." (He meant her complaints, not the violations.) She says she was then ordered to lie and blame pay discrepancies on the company's outside payroll vendor. She refused.

She also says that in January 2008, Rob Brackett, president of the company's Internet group, told her that CEO Marc Bell had complained to him in December — the first day he came to visit Penthouse's new acquisition — that the women in FriendFinder's technology department were "ugly" and that Cedeno should get rid of them and replace them with more attractive workers to keep the male employees happy. Brackett pressed Cedeno, asking her how she was going to satisfy Bell. She refused the request.

The company has admitted in its S-1 filings that it failed to collect taxes owed on Internet purchased in the European Union for years. It has already charged $64 million against the purchase price of Various. (It now reports the acquisition as costing the company $401 million, down from $500 million, thanks to this and other charges.) But it has not disclosed the full extent of its pending tax bills. Cedeno says the back taxes in Germany alone come to $40 million and the company owes $10 million in another European country.

FriendFinder seems to have made a formidable enemy. Cedeno has hired Amanda Metcalf, a former prosecutor now in private practice who's best known for her role in a lawsuit against Death Row Records. I asked Metcalf why she took on Cedeno's case. "Woman done wrong," she replied. If Cedeno proves her allegations in court, FriendFinder's executives will learn a hard lesson: It's one thing to profit from women. It's another to take advantage of them.

Some people say Twitter, which lets people post 140-character status updates to their friends and the rest of the Internet, is replacing email. That might explain why Twitter HR manager Krissy Bush confused the "cc:" and "bcc:" fields in her email client when she informed 186 hopefuls that they weren't a fit for the job of business product manager. How can she expected to deal with such an outdated communication mechanism? Here's the email header and body, with addresses obscured:

Subject: Business Product Manager Position at Twitter, Inc.

Hi,

Thank you so much for taking the time to apply for the Business Product Manager position at Twitter, Inc. During the course of our recruiting efforts, we come across many fine candidates such as you, and we carefully evaluate each candidate's background and interests against our projected workloads and staffing needs. Although we are impressed with your background, the hiring committee has decided to move forward with a different candidate.

We will keep your information on file for six months in case future opportunities arise.

Thanks,

—
Krissy Bush | HR Manager | Twitter, Inc.

539 Bryant St. Suite 402, San Francisco, CA 94107 Fax: 415.896.XXXX
Mobile: 415.314.XXXX http://twitter.com/krissy

The best part is the legal disclaimer which follows:

This email communication (and any attachments) are confidential and are intended only for the individual(s) or entity named above and others who have been specifically authorized to receive it. If you are not the intended recipient, please do not read, copy, use or disclose the contents of this communication to others. Please notify the sender that you have received this email in error by replying to the email. Please then delete the email and any copies of it. This information may be subject to legal, professional or other privilege or may otherwise be protected by work product immunity or other legal rules.

The consolation to the Twitter rejects: At least they're not working at a company so incompetent that it exposes the emails of job applicants.

A tipster who saw one of the notices says the email had DRM restrictions — similar to the ones that prevent the copying of music files — that prevented it from being forwarded or printed, and instructed the fired employees to pack up their things and go home, where their severance package would be mailed. As the tipster put it: "No meeting with their boss. No meeting with HR. Nada."

It's a bit surprising that no one has raised a stink about Microsoft's email firings. Two years ago, when RadioShack laid off 400 people by email, it became a nationwide story. Perhaps Microsoft employees are more accustomed to doing business electronically. And give Microsoft HR some credit: Sparing the newly jobless an awkward, canned speech might actually be a blessing.

Update: Amusingly sarcastic Microsoft hyperflack Frank Shaw writes in a non-self-destructing series of emails:

Not accurate at all.

The company went to great efforts to notify people in person, with dignity and respect. It would have involved an email to supplement a discussion only in cases where people were remote.

And maybe nobody raised a stink because it's not true, eh?

Our source witnessed the unprintable pink slip firsthand.

(Artist's rendition of Microsoft email by Owen Thomas, using Microsoft Entourage, an actual Microsoft product)

From: Sachi Kittur [mailto:xxxxxx@yahoo-inc.com]
Sent: Wednesday, November 12, 2008 9:22 AM
To: all-canada@yahoo-inc.com
Subject: AMEX corporate cards and Taxi Chits

Use of Taxi Chits:

In addition to our recent halt of pre-paid transportation services, please note that effective immediately, we will no longer be using taxi chits. These changes will allow us to institute better controls as we try to streamline our approvals and tracking of corporate expenditures. We ask that all employees simply expense any business related transportation expenses as per our expense policy guidelines. Taxi chits will now reside with HR so if you have any extra-ordinary circumstances that justify their use (ie. client visit etc), please come and see HR.

Corporate AMEX cards:

Keeping in line with our goal of ensuring better cost controls across our business, we have decided to significantly reduce the use of our AMEX corporate cards. Effective immediately, ALL employees (with the exception of senior management team or newcomers that don't have any credit history ) that currently have a corporate card will no longer be eligible to use these and will be asked to return these cards into HR over the next 2 week period. For those of you that are impacted, a reminder that you will be responsible for clearing up any outstanding balances so please ensure that any expenses owing are submitted into AP immediately. If there are any extra-ordinary circumstances that warrant access to a corporate card for frequent business expenditures, please speak to HR/Finance and we will work out an alternate arrangement.

Thanks in advance for your support and cooperation.

Best regards,

Sachi

Sachi Kittur I Senior HR Manager I Yahoo Canada I 207 Queens Quay West Suite 801 Toronto M5J 1A7 416.687.xxxx M: 416.500.xxxx IM: xxxx

The company, founded by white male Matt Mullenweg, has just increased its white maleness with the acquisition of PollDaddy, a two-white-males Irish firm.

Are we being too harsh on Automattic? Should we give it credit for not being 100 percent white and male? After all, Google prides itself that 32 percent of its employees are women; that it views that level as an achievement shows how imbalanced Silicon Valley's scales of equity are. Still, look at the Automattic company photograph, taken at a staff retreat in Breckenridge, Colo. If I were a woman or a minority working at this company, I'd hide in the corner, too.

One of the most significant employment law cases of 2007 was Reid v. Google, Inc., in which the search giant was charged with age discrimination for terminating PhD. computer scientist Brian Reid at the age of 54. Prior to his firing, Reid was reportedly subjected to a plethora of age-related disparagement, made the butt of jokes, and found himself a fish out of water in a "youthful atmosphere" featuring employee participation in hockey, football and skiing. Reid testified that upon being fired, he was told he was not a "cultural fit."

Google maintained it had simply eliminated Reid's dead end job, but in a unanimous decision last fall, the Court of Appeal for the Sixth District wrote:

We conclude that Reid produced sufficient evidence that Google's reasons for terminating him were untrue or pretextual, and that Google acted with discriminatory motive such that a factfinder would conclude Google engaged in age discrimination.

With the case headed to the California Supreme Court, it's all the more incredible that Google is reprising Enron's work-hard-play-hard motto — a red flag for ageism — in its current recruiting. But anything's fair game after using Hitler in your hiring.

But besides the commercial rationale, there's a more disturbing reason for Facebook to throw a prom for its employees. With its cafeterias, gyms, and volleyball courts, Google likes to makes its employees feel like they never left college. Could Facebook be trying to make its workers feel like they never left high school? Infantilization is an effective employee-retention program. But it is not a particularly attractive one.

More pictures from Facebook's prom.

They'd read a lot of research around how to form the best companies and a lot of studies show that if you fall below 20 percent of the workforce being women, things become really imbalanced and unhealthy inside the corporate culture.

Brenco also counts former president Bill Clinton, big money Democrat Ron Burkle and AOL founder Steve Case as investors. 133 workers freed from their servitude received a final paycheck and bus tickets home. I guess Brazilian workers just don't understand the entrepreneurial spirit of putting in long hours at a startup to help the company succeed. Savvy Valley employees know that if you want to enjoy basic human freedoms you should work at Starbucks or the post office.

(Photo by AP/Andre Penner)

I try to scare people in the interview. It's basically my technique. I tell them this is going to be hard. You're going to suffer, but we're going to make great stuff. I try to create an entity where people who are not passionate get expelled by the system.