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By Lindsay Gellman 

Stanford University's Graduate School of Business has won plaudits for its tech-focused offerings and been ranked the top school in the nation, if not the world. The two-year M.B.A. program admits just 6% of applicants, counts among its alumni General Motors Co. Chief Executive Mary Barra and maintains a powerful network in Silicon Valley.

A rare ripple appeared on the surface in September when the school's dean, Garth Saloner, said that he would leave his post at the end of the academic year, citing complications from a lawsuit filed by a former professor alleging that the dean discriminated against him while having a relationship with the professor's estranged wife, also a member of the business school faculty. The suit, filed in superior court in Santa Clara, Calif., is seeking unspecified monetary damages against Stanford and Mr. Saloner.

Mr. Saloner will remain on the school's faculty. In a statement Thursday, he said, "I am proud of what we have accomplished in the last six years, " adding that he is "focused on building on that momentum in the year ahead."

Stanford and Mr. Saloner are vigorously challenging the lawsuit filed by the former professor, James Phills, who now works at Apple Inc.

Yet some current and former business school officials say that allegations in the lawsuit reflect difficult working conditions at Stanford under Mr. Saloner, a hard-charging leader who, they say, made life tough for some women on the school's staff and prompted many nonfaculty leaders to leave.

The lawsuit claims Mr. Saloner and the school discriminated against the professor, who is black, and accuses the dean of not properly recusing himself from decisions about Mr. Phills when he was beginning a relationship with Mr. Phills's wife, Deborah Gruenfeld, in the summer of 2012, after the couple separated. Mr. Phills contends he was unfairly removed from his professor position and claims the dean and Ms. Gruenfeld pushed the school to terminate his employment in 2014. The suit alleges Mr. Phills was discriminated against by Mr. Saloner and Stanford on the basis of his marital status, race and gender.

Stanford said in a statement that "at all times Dr. Phills was treated fairly and equitably." The statement also said the dean promptly notified officials of his relationship, stating that "others in the university took responsibility for final decision-making about matters involving Dr. Phills and his wife."

The suit paints the business school as an unpleasant workplace, and Mr. Phills alleges that Mr. Saloner treated him poorly after initiating a relationship with Ms. Gruenfeld.

The court papers include emails and messages between the dean and his girlfriend that could prove embarrassing for the dean and the school.

The university has fought to keep those messages out of the public eye. A Stanford spokesman said Mr. Saloner and the university have filed a cross-complaint accusing Mr. Phills of illegally obtaining emails, messages and texts between the dean and Ms. Gruenfeld. Andrew Pierce, Mr. Phills's attorney, said "anything [Mr. Phills] obtained, he obtained by using passwords his wife had given him on devices that were in his possession lawfully."

Some of the court documents reviewed by The Wall Street Journal include sexually charged exchanges as well as conversations in which Ms. Gruenfeld vents her frustrations with Mr. Phills's behavior amid their split, and Mr. Saloner calls Mr. Phills "an elephant seal." Mr. Phills filed for divorce in 2012 and the proceedings are ongoing.

In a resignation email excerpted by the school, Mr. Saloner referred to the lawsuit as "baseless and protracted." Ms. Gruenfeld declined to comment.

Some women who formerly worked at the business school say they recognize the difficult work culture described in Mr. Phills's suit, one at odds with Stanford's reputation as a friendly, collaborative environment.

Kriss Deiglmeier, formerly the executive director of the business school's Center for Social Innovation, recalls that Mr. Saloner berated her in a 2011 meeting when the two disagreed over how to use funds earmarked for the Center, "yelling and screaming" at her in front of colleagues.

Sharon Hoffman, a former director of the school's M.B.A. program who left in 2012, described an environment of "toxic leadership" that precipitated an "exodus of women" from senior roles during Mr. Saloner's tenure, including her own departure.

After Mr. Saloner grew frustrated with her over student reaction to a crackdown on partying in 2010, Ms. Hoffman said the dean later reassigned her from her role overseeing the M.B.A. program and about 70 staff to directing a one-year master's program with a staff of three. The new position required long periods of travel, which wasn't feasible for Ms. Hoffman, who had three young children. She resigned.

"Garth absolutely forced me out," she said. Stanford declined to comment on specific interpersonal incidents.

Ms. Hoffman was among 46 current and former business school employees, both men and women, who sent a letter last year to university provost John Etchemendy complaining of the dean's behavior and alleging that he violated the university's code of conduct and human-resources policies both in his relationship with Ms. Gruenfeld and with hiring and promotion decisions.

The signees urged Stanford leaders not to reappoint Mr. Saloner to another five-year term. He was reappointed last year.

The provost referred a request for comment to a university spokesman, who said Friday that the petition followed two reorganizations at the business school, "in which some staff members lost their jobs and others were unhappy about changes in their job responsibilities." Jeffrey Pfeffer, a professor of organizational behavior at the business school, said that while the dean struggled with nonteaching staff, Mr. Saloner "gets on famously with the faculty."

"Any assessment of a leader's style should take into account the results for the organization," the university spokesman said in a statement.

Write to Lindsay Gellman at Lindsay.Gellman@wsj.com

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(END) Dow Jones Newswires

October 01, 2015 19:10 ET (23:10 GMT)

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