DULUTH – A seasonal custard shop in Ely has settled a sexual harassment case with the Minnesota Department of Human Rights, which said in a lawsuit the owner "regularly made unwelcome and offensive comments of a sexual nature" to a teenage employee in 2015 and "had a pattern of harassing employees."

"We need to make sure this doesn't ever happen again," Human Rights Commissioner Rebecca Lucero said. "At the end of the day, this is about changing the culture here, a highly sexualized culture."

Red Cabin Custard and Bill Chalmers, who owns the shop with his wife, agreed to pay a $5,000 fine and implement a harassment policy.

But the settlement says Chalmers has admitted to no wrongdoing, and his lawyer challenged the characterization of Chalmers in the department's news release this week.

"Commissioner Rebecca Lucero is representing as established facts the disputed allegations from the complaint of a settled lawsuit," attorney Patrick Spott wrote in a letter to the state Attorney General's Office demanding the release be retracted. "Ms. Lucero knew that her representations of fact were disputed and unproven when she issued the press release. ... This is misleading and disingenuous at best; at worst, it is defamatory."

The department alleges in its lawsuit that Chalmers "needlessly and inappropriately made sexual remarks and injected sexual innuendo at the workplace around and directed at his young female employees on a daily basis," including a 14-year-old who with her mother brought the case to the department.

"I pursued this case because I felt it was my duty as a young girl with a voice to fight for the girls without voices, the girls that have been too scared to report, the girls that haven't been listened to," the 14-year-old said in a statement.

Spott said Chalmers denies the allegations and regrets settling the case. "If we could undo it now, we would," he said. "We were ready to go to trial. "

The Department of Human Rights began investigating the case in 2016 and dismissed the charge in February 2018. The department issued a new "finding of probable cause" after an appeal in June 2018.

Lucero said she "made the decision to move forward with the lawsuit because we couldn't reach a settlement." The suit was filed in August 2020 and settled in May.

Brooks Johnson • 218-491-6496