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Red Wagon Creamery closes campus location amid financial struggles, allegations of sexual misconduct



Not long after opening in 2011 as a food cart serving homemade ice cream, Red Wagon Creamery exploded onto the Eugene food scene. The cart was replaced by a downtown store in 2013, and by 2016, the business had added a factory and a satellite store at the University of Oregon. Red Wagon’s ice cream was featured on Food Network and in the Washington Post and the Register-Guard.

Seven years later, the business is in disarray, according to an investigation conducted by the Emerald. Red Wagon is being sued by creditors, employees complain of unpaid wages, the owners owe back taxes, and multiple women, all employees of Red Wagon, have accused owner Stuart Phillips of sexual harassment.

Red Wagon’s widespread marketing and quick growth showed business savvy on behalf of the owners. In 2015, owners Stuart and Emily Phillips took advantage of a new state law and sold shares of the company to local investors, raising $120,000. The state-run program that helped them find investors profiled the Phillips’ success prominently on its website.

In fall 2016, Red Wagon expanded, opening an ice cream factory and a new location on the University of Oregon campus. The campus location soon employed several students.

But despite the apparent success, its campus location closed in December 2017, and while the downtown location remains open, its website is down and its phone number disconnected. A UO spokesperson said the campus location closed because Red Wagon did not meet the financial obligations of its contract.

Red Wagon Creamery owner Stuart Phillips, pictured with UO president Michael Schill and Oregon Attorney General Ellen Rosenblum. (Red Wagon Instagram)

Former employees say Red Wagon didn’t meet its obligations to them either.

“I just want to make sure people know what’s happening,” said employee Mackenzie Miller, who has worked at Red Wagon since 2015. “I don’t want other people to get hired and experience what I did.”

Miller said that Stuart Phillips began making lewd comments toward her last year during work, telling her that she had, “nice, big tits,” and that they should “make a porno of her bathing in ice cream.”

It was common, Miller said, for customers at both the EMU and downtown locations to come up to her and complain about Phillips, saying that he had made them uncomfortable with his comments. She estimates that this happened at least 10 times over the past few years.

Stuart Phillips is originally from Mississippi. Before going into the ice cream business he was a lawyer, serving as a judge advocate in the U.S. military and then practicing law with his father. According to Red Wagon’s offering document, Stuart and Emily moved to Eugene to start Red Wagon and be active owners. Stuart is the director of sales and marketing and Emily is the managing director and board chair.

In an email to the Emerald, Stuart explained some of the challenges Red Wagon faced after getting started:

This has been a tough time for us, growing pains and inexperience were our greatest hurdles,” Phillips wrote. “Moving from a small family business to having employees was a big adjustment and when things behind the scenes got difficult, it affected our employees. We tried to shield them as best we could, but weren’t always successful.”

Ilee Jo, the former manager of the EMU location, also had issues with Phillips. In July 2016, Phillips took photos of her to use on Red Wagon’s Instagram page, and told her her “tits looked nice” in one of the photos. Jo was 19 at the time.

Jo said she had been uncomfortable around Phillips before and his comment prompted her to immediately file a formal sexual harassment complaint with the company. The complaint was reviewed by Stuart’s wife.

Emily Phillips acknowledged the complaint and took corrective action. In an email to Jo dated Aug. 3, 2016, she wrote, “Stuart Phillips made an inappropriate comment to you. He has been counseled about his behavior, sent an apology via email to you, and has watched a training video about sexual harassment in the workplace.”

Emily Phillips also promised that Stuart would no longer be at Red Wagon while Jo was working. This only lasted a few months, Jo said, and she was often alone with Stuart in the store afterward.

When reached by phone, Stuart Phillips initially denied knowledge of any sexual harassment complaints involving Red Wagon.

“Most of our owners and 90 percent of the leadership team is female,” Phillips said. “So I’d be very surprised.”

After being questioned more directly about the July 2016 incident with Jo, Phillips said he  remembered that a complaint had been filed.

“Someone complained that I made an improper comment, so I was cautioned to watch my mouth and not make a comment like that again,” Phillips said.

Phillips said he does not remember making inappropriate comments to any other employees.

 

Stuart Phillips pictured with Oregon Gov. Kate Brown and volunteer members of the Governor’s Small Business Advisory Group in 2016. (Red Wagon Instagram)

Another employee, UO student Nadia Medeiros, described feeling uncomfortable around Phillips and hearing complaints from customers about his behavior in the EMU.

UO spokesman Tobin Klinger confirmed that a Title IX complaint involving Red Wagon was filed with the school in January. The Title IX office investigates reports of gender discrimination, sexual harassment, and sexual violence. UO received the report after it had made the decision to end Red Wagon’s lease. According to Klinger, the school wasn’t aware of sexual harassment allegations against Phillips before this and that the accusations did not play into the university’s decision to end the lease.

“We encourage any student who is feeling harassed to report it, regardless of whether the person is a university employee or not,” Klinger wrote in an email. “We want to ensure a harassment-free environment across campus and that includes anyone doing business on our campus.”

Financial struggles

The three workers interviewed for this story all had issues getting paid by Red Wagon. Jo said that during the two years she worked at Red Wagon, at least half her paychecks were late, not for the full amount, or bounced at the bank. Paydays were an issue ever since she began working there in 2015.

Jo quit Red Wagon in April 2017. Workers who stuck it out later had worse issues. Miller said that by fall 2017, paychecks were uncommon and most workers were paid with cash out of the register. This was often for partial amounts and with taxes deducted, but no pay stubs were provided.

Miller had to repeatedly ask for a W2 when it was time to file last year’s taxes. When she finally got it, her name was spelled wrong, her address was incorrect and her phone number was in the box where her Social Security number was supposed to be.

Medeiros only worked for Red Wagon for a few months, quitting after repeated issues with getting paid. She said Red Wagon still owes her $200 but she’s given up trying to get it.

Three wage-and-hour complaints have been filed against Red Wagon with the Oregon Bureau of Labor and Industries.

In the effort to raise capital for expansion, Stuart and Emily sold shares of the company through the new Hatch Oregon Community Public Offering Program in January 2015. Their campaign was a success: 173 investors purchased shares in 2015 and Red Wagon met its goal of raising $120,000.

Red Wagon’s reported sales from 2011-2014 were included in its offering document for review by potential investors in 2015.

Stuart Phillips was interviewed about Red Wagon’s success in the following months, and was a featured speaker at a national conference for small-business funding.

But public records show that Red Wagon was struggling to the pay the bills before its public offering. Liens filed by the IRS indicate that Red Wagon owes more than $32,000 in taxes dating back to 2014.

More financial woes hit Red Wagon in 2017. Over the summer, the company left its ice cream production facility, which had only been open since fall 2016. Most of the company’s larger equipment is in storage, as ice cream production is now done in-house at the downtown store.

In December 2017, Community LendingWorks, an Oregon nonprofit that arranges loans for small businesses, artisans and crafters, sued Red Wagon and Emily Phillips in an attempt to recover more than $34,000 in loan payments that Red Wagon is late on. A judgment has been placed on Red Wagon for the principal plus attorney fees, allowing Community LendingWorks to come after Red Wagon’s and its owners’ assets.

Stuart Phillips asserts that Red Wagon is not planning to file for bankruptcy anytime soon.

Stuart and Emily Phillips received a 72-hour eviction notice for their home in May 2017 after they didn’t pay rent for five consecutive months. Court records show they then paid the full sum and the eviction notice was dropped.

In an April 2017 email obtained by the Emerald, Emily Phillips told employees that they wouldn’t be paid on time that week, but expressed optimism for the company’s future.

We have faith in Red Wagon as a company. We have been built by strong and committed employees, and we will survive this upheaval and thrive. For any of you who need to leave, we will more than understand, and you would always be welcome back. For those of you who stick it out with us, it will be worth it,” Phillips wrote.

Stuart and Emily were featured in an August 2017 Register Guard profile. The article states that Red Wagon is planning to do another community public offering soon. Stuart Phillips confirmed to the Emerald that that idea is now off the table.

Follow Jack Pitcher on Twitter @jackpitcher20

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Jack Pitcher

Jack Pitcher

Jack Pitcher is the Editor in Chief of the Emerald. He's a business major and Trail Blazers fan.

Reach Jack at [email protected]