Long Beach, Calif., resident Deann McClung, then 34, claimed James made "sexually offensive contact with her breasts" and "did cause [her] to have sexually offensive contact with his sexual organ," according to the lawsuit, which was released from court archives.
James, now 40, countersued the woman for fraud, but both cases were ultimately dismissed in May 2001. L.A. attorney Patrick Fraioli says, "In a case like this, I strongly suspect a settlement was reached."
An attorney for James, who did not represent him at the time, says the lawsuit appears "baseless."
"It is unfortunate but many times despite the total lack of merit it becomes more expedient just to resolve the matter as opposed to going through the process," James's attorney says. "I believe that is what happened in that particular situation."
A lawyer for McClung had no comment.
McClung, who was hired at the custom motorcycle shop around April 1999, alleges that she was fired less than a year later for her complaints of harassment. She also stated that James made sexual propositions and degrading comments to her and displayed pornography in the workplace. The harassment occurred "on a regular basis," according to the papers.
Since James's alleged cheating scandal broke last week, four women have claimed to have had affairs with Sandra Bullock's husband.