ya, I don't understand the context argument at all. Unless perhaps Peters was straight reciting rap lyrics that had the word when trying to justify the playing (or not playing ) of the certain music (which is also not really acceptable, just ask Kendrick Lamar - though I have my opinion on that whole fiasco), I don't think there is ANY understandable reason for him to use the word.
Using the N word at the workplace, regardless of context, would absolutely be reported to HR and be punishable. The ONLY circumstance I can think of where he could be truly innocent in all this (assuming the player isn't just lying, which of course is plausible at this stage) is if Peters stated "don't play music that has <N-word> in it here". But even then, if he's so concerned about the use of the word, then he wouldn't utter the word itself when making his point.
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