Last week, James' girlfriend, Raquel Leviss, confronted him about claims he had been sleeping with their mutual friend, Hope, for three years. He denied them and went off on everyone in sight, including Katie, who was standing nearby.
"Don't even get me started on you, darling," he shouted. "Those shorts aren't working for you, babe. She shouldn't be wearing those shorts. They're not very flattering. Lose some f--king weight!"
This week, Katie and some of the girls told Raquel what James said, but Raquel dismissed the comments as a result of too much drinking. She assured the girls that he only speaks that way when "he's been drinking way, way, way too much."
"I feel like you guys don't see the James that I see," she continued. "You guys only see the James that's out, that's partying, that's DJing, that's getting drunk, that's making insults. I'm not proud of that James at all. But the James that I see treats me like a queen."
"I feel like I'm living in some twilight zone where monsters are able to do and say whatever the hell they want," Katie replied, adding that she planned on confronting Lisa about James remaining a SUR employee. "This has to f--king end."
When Katie told Lisa what James said, Lisa replied, "I don't want you to go back to questioning how beautiful you are. He's an idiot."
"But he's an idiot who gets away with speaking abusive language towards women, and I don't tolerate that anymore," Katie said. "I don't think it's right that I should show up to work and have to subject myself to that kind of language. This has been a home -- a family -- for me for almost nine years. I am not willing to work in a place where this is tolerated."
"So basically, it's an ultimatum?" Lisa asked.
"I've only given one ultimatum in my life," Katie replied, recalling telling now-husband Tom Schwartz that he had six months to propose to her. "That worked, so maybe this is an ultimatum."
"Vanderpump Rules" airs Mondays at 9 p.m. on Bravo.