The owner of a frozen custard stand in Ely settled a lawsuit in May alleging "severe and pervasive sexual harassment" of a 14-year-old female employee, including unwanted touches and daily, graphic commentary about customers and other employees at work.

A Minnesota Department of Human Rights investigation that preceded the state's civil lawsuit found probable cause that William Chalmers, 61, owner of Red Cabin Custard, 1114 E. Sheridan St., "used his position of authority to subject a then-14-year-old girl to unwanted touching, graphic sexual innuendos, and sexual depictions of genitals in 2015," a news release said Tuesday.

Chalmers' case was among three settlements announced by the department this week, including a rape case involving the operators of the Minnesota Renaissance Festival.

"Abuse and misuse of authority to sexually assault, harass, or rape workers violates civil rights law," Minnesota Department of Human Rights Commissioner Rebecca Lucero said in the news release. "For employers to effectively prevent sexual assault, harassment, and rape from occurring, they must not only have strong policies, but they must also enforce those policies."

Chalmers is a co-owner of Red Cabin Custard with his wife, Cynthia. He declined to comment about the case when reached by the News Tribune, deferring to his attorney, Patrick Spott, of Duluth.

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Spott denied wrongdoing by his client, calling the allegations "untested" and "unfounded."

"Bill‌ ‌is‌ ‌pretty‌ ‌confident‌ ‌no‌ ‌one‌ ‌will‌ ‌believe‌ ‌this‌ ‌of‌ ‌him‌," Spott said. "If (the state) actually believed all of this stuff, why settle the case for almost nothing?"

The settlement agreement filed in District Court in Virginia in May indicated Red Cabin Custard paid $5,000 to the victim.

The Department of Human Rights alleged in its civil complaint that Chalmers had a pattern of harassing employees, including a then-15-year-old cousin of the 14-year-old girl who first reported the behavior. Over time, Chalmers' sexual comments "intensified, grew more personal, and even extended to children," the state's news release said.

The Department of Human Rights' news release referred to the victim by a first name, and quoted the victim, whom the News Tribune won't identify for having been a minor at the time of the incidents.

“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 person said in the state's news release. "My former boss and bosses like him need to know that they do not have the power to stifle my voice nor any other young girl's voice when it comes to sexual harassment in the workplace."

According to the state, Red Cabin Custard chose not to have sexual harassment policies. The Department of Human Rights said such a decision fostered a power imbalance between the owner and workers that resulted in the harassment.

"The only people to whom workers could have reported the repeated sexual advances were the owners themselves," the state news release said. "And, the owners were the harassers."

A jury trial scheduled for February 2022 was canceled in lieu of the settlement. As part of the settlement, the Red Cabin Custard owners agreed to enroll in six hours of anti-discrimination training.

“Every business has a legal obligation to ensure their workplace is free from sexual assault, harassment and rape plain and simple," Lucero said. “These settlement agreements require just that structural change to ensure enforcement with strong policies towards safe and welcoming workplaces."

According to the complaint filed in District Court in August 2020, Chalmers often worked alone with the 14-year-old girl, and the custard stand exclusively hired girls during the roughly two-year period reviewed by the investigation. During training, Chalmers allegedly informed the girl he'd be touching her back to get around inside the workspace, "even though he could have passed by without touching her and a simple verbal statement would have been sufficient to let her know he was moving past her," the complaint said.

In other allegations:

  • Chalmers often referred to the top of the custard as a "nipple," and compared the texture of custard to that of a vagina, the complaint said.
  • He regularly made comments about women, including customers referring to one customer with a comment: "Wow, I swear I saw her on a porno."
  • Chalmers allegedly referred to the 15-year-old relative of the victim as having a "tight" body, while also commenting about wanting to have sex with that girl's mother.
  • Chalmers frequently referred to females using the words "tits" and "ass," and the offensive commentary worsened over time, the lawsuit said. The suit claimed he made sexualized comments about girls who appeared as young as 7 or 8 years old and the way they licked ice cream cones.

After roughly six weeks of work, the girl said she was forced to quit because she could "no longer tolerate the offensive working environment." It had been the girl's first job. Initially, she tried to brush off the owner's behavior, noticing her co-workers doing the same, the lawsuit said.

The victim and her relative filed a report with the Ely Police Department in August 2015, shortly after the girl quit the job. The police referred the investigation to the Department of Human Rights, which declined to go forward with the case in 2018 after its initial investigation. Upon appeal by the families involved, then-Commissioner Kevin Lindsey found probable cause, leading to Lucero's filing of a civil lawsuit in 2020.

"Their first investigation found no probable cause," Spott said. "There has been no judicial finding that any of these things happened and, in fact, the parties' settlement doesn't admit any wronging."

Spott was dismayed the state made a news release declaration of the settlement, but in the settlement, parties agreed to make terms public. The civil complaint containing the allegations is public data.

"It's a nuisance case," Spott said. "There was no proof any of these things happened."

As part of its settlement, Red Cabin Custard must also implement and enforce anti-harassment policies and ensure their staff are trained on what constitutes sexual harassment and assault and how to address it. As part of the agreements, staff must also have multiple ways to report the harassment or assault.

To ensure compliance with the agreement and the Minnesota Human Rights Act, the department will continue to monitor the business for four years.

If a person believes they are the victim of sexual assault, sexual harassment, or any other type of discrimination covered under the Minnesota Human Rights Act, they are urged to contact the Discrimination Helpline at 833-454-0148 or submit a form at

This story was updated at 2:45 p.m. June 2 to correct that Commissioner Lucero filed the lawsuit in 2020 following Commissioner Lindsey's finding of probable cause in 2018. It was originally posted at 11 a.m. June 2.