Salvation Army resolves Modesto sexual harassment lawsuit

A sexual harassment lawsuit involving the Salvation Army’s Modesto Citadel Corps and its former leader has been resolved, though both sides declined to provide details.

Former longtime corps employee Kimberlea Rea, 50, sued the religious nonprofit and Capt. Michael Paugh in federal court in September 2013, claiming he had sexually harassed her for about 18 months and that her co-workers and supervisors knew he was harassing her but failed to report or stop his behavior in a timely matter.

The allegations included that Paugh talked to Rea about his and her sex lives, repeatedly and inappropriately touched her, drove by the single mother’s Modesto home, asked about her teenage children’s sex lives, commented about her appearance and frequently followed her around at work.

The lawsuit was dismissed at the request of both sides Feb. 18. The Salvation Army and the Lodi law firm Bowman & Berreth, which represented Rea, would say only that the case has concluded. Rea had sought $1 million in damages.

“The matter has been resolved and we are not at liberty to discuss any of the details,” said Laine Hendricks, public relations director for the army’s Golden State Division, which includes Stanislaus County, in an email.

The resolution comes after Magistrate Judge Barbara McAuliffe in December urged both sides to settle. She told attorneys in a Dec. 19 federal court hearing in Fresno that she had read the complaint and the Salvation Army faced some risk if the matter went to trial.

“If you put his client (Rea) on the stand and she tells her story, that could be a very compelling story, and I think the defendant (the Salvation Army) needs to look at the jury verdicts in this district, especially for sexual harassment claims, and come to the table,” McAuliffe said, according to a transcript of the hearing.

“That’s just my view,” she said. “Obviously, I can’t force you to settle, but I think the case needs to get resolved.”

A settlement conference was held in January, according to court records. Details of the conference are not included in the records.

Pat Libby, director of the University of San Diego’s Institute for Nonprofit Education and Research, said she advocates that nonprofit organizations be transparent when facing a crisis. But she understands the Salvation Army’s position.

“Every time there is a scandal, it has a ripple effect on all nonprofits and jeopardizes charitable contributions and the public’s willingness to volunteer,” Libby said. “The most valuable asset a nonprofit owns is its reputation.”

She added that Salvation Army officials probably are distraught over the mistreatment Rea alleges and over having less money to help the poor if there were a financial settlement.

Several months before the lawsuit was filed in 2013, the Salvation Army reassigned and disciplined Paugh after an investigation concluded he had harassed a female employee. Paugh and his wife, Maj. Beth Paugh, were reassigned to the Salvation Army’s Torrance Corps in Southern California.

Hendricks, the Salvation Army spokeswoman, said in March 2013 that Paugh had been sent to a new post with less responsibility, where he would receive training, counseling and coaching until he was ready for more responsibility.

Paugh’s LinkedIn profile says he is assigned to the Salvation Army’s Adult Rehabilitation Center in Anaheim. He did not return a phone call left for him at the center. Officials have said Paugh has served in the Salvation Army for more than a dozen years and that this was the first complaint lodged against him.

Rea’s lawsuit states that she was hired by the Modesto Citadel Corps in 2006 as a bookkeeper and human resources assistant. She said this week that she is no longer employed by the Salvation Army.

“All I can tell you is the case has been resolved,” she said. “I’m sorry, (but) I’m not at liberty to say anything.”

This story was originally published March 5, 2015 at 6:58 PM with the headline "Salvation Army resolves Modesto sexual harassment lawsuit."