Former Executive's Suit Against Sunrise Is Dismissed

A lawsuit brought by Sunrise Senior Living's former chief financial officer against the company has been dismissed, and neither side is discussing the outcome.

Bradley Rush's lawsuit, filed in September, came as the McLean-based operator of retirement communities grappled with accounting problems that eventually led it to lower earnings by $173 million from 1996 through 2005. A special board of directors committee ultimately determined that "inappropriate accounting" had occurred over a two-year period from the summer of 2003 through the end of 2005, and the company subsequently let go three senior executives, including the president,

Rush was suspended and terminated before that, in the spring of 2007, after the company decided he had failed to adhere to Sunrise's document retention directives, the company said at the time. Sunrise said it had asked employees on two occasions to retain documents about specific accounting issues in anticipation of a review.

Rush sued Sunrise for breach of contract and other claims, saying that the company "initiated a public and private campaign" to defame him "directly and through innuendo" by making it appear he was responsible for the accounting troubles. Rush said senior management pressured him to complete a review of the company's accounting irregularities because Sunrise was looking to be acquired. His suit asked for $13.5 million in lost compensation and other damages.

The company said the suit lacked "both factual and legal merit."

"The litigation concerning Sunrise and Mr. Rush has been dismissed," the company said in a statement. "We have no additional information to share on this matter."

Rush's attorney, John Dowd of Akin Gump Strauss Hauer & Feld, did not respond to multiple messages left with his secretary.

In court papers filed before the case ended, Sunrise said the board "had several reasons to suspend Rush and to terminate his employment for cause," including his failure to cooperate with an inquiry undertaken by a special committee of the board; the deletion of files on a company laptop computer issued to him; and inappropriate explicit material that violated the company's information security policy.

In his lawsuit, Rush acknowledged that he had deleted all the files on the computer, one of two laptops he had been issued, saying that the company already had all his work-related files. Everything else on the machine -- his tax returns, personal passwords, music and photos -- was personal, the lawsuit says. He claimed the company had told him that he did not have to turn over personal files and materials.

Since the accounting problems became public, Sunrise has revamped several management practices, and chief executive and co-founder Paul J. Klaassen agreed to step down as chairman as the board added new independent directors.

The company named as its new finance chief Richard J. Nadeau, who until last summer worked as a consultant to Sunrise on its accounting problems.