As I have noted in prior posts, one of the follow-on effects of the recent racial justice movement has been increased scrutiny of racial diversity within corporate management, and in particular on corporate boards. The boards of several publicly traded companies have been hit with shareholder derivative lawsuits alleging that the directors breached their fiduciary duties by failing to include African-American individuals on the boards, while at the same time the companies were touting their diversity and inclusion efforts.

In addition to the recent litigation, efforts to advance board racial diversity have included legislation. Earlier this year, the California legislature passed a bill mandating the inclusion on boards of California headquartered companies of representatives of “underrepresented communities.” On September 30, 2020, California Governor Gavin Newsom signed the bill into law. As discussed below, even though the law has only been in place for a few days, a lawsuit challenging the bill has already been filed.
Continue Reading California Board of Directors Diversity Bill Signed Into Law, Challenged by Lawsuit

California-based high technology firm Cisco Systems is the latest company to be hit with a racial diversity lawsuit, based on allegations that its directors breached their fiduciary duties to the company by failing to include an African-American on the company’s board, despite the company’s numerous statements about its commitment to diversity. Though this latest lawsuit is in many respects similar to the previously filed board diversity lawsuits, it does differ in that it was not filed by the plaintiffs’ firm that has filed most of these lawsuits and also because the lawsuit follows a pre-suit demand on Cisco’s board, by contrast to most of the prior suits where the plaintiffs had made no demand and instead argued demand futility. A copy of the complaint in the Cisco Systems action can be found here.
Continue Reading Cisco Systems Hit With Board Diversity Lawsuit

The current racial justice movement has created an environment in which corporations and other organizations are under pressure to reconsider and address their diversity and inclusion practices. Organizations that lack racial diversity in their corporate leadership – particularly on their boards of directors – have come in for increasing criticism and, as I have noted on this blog (most recently here), the possibility of board diversity litigation. In addition, beyond the scrutiny and litigation, the California legislature has passed a bill that would require publicly traded companies in the state to have at least one director from a minority community by the close of 2021.

It now appears that as a result of both the scrutiny, the legislation, and perhaps even because of the litigation threat, a number of companies have proactively taken steps to address these issues by pleading to add a Black director to their boards within a year.
Continue Reading Growing Number of Companies Pledge to Address Board Diversity Issues

In yesterday’s post, I noted that earlier this week, a plaintiff shareholder had filed a board diversity lawsuit against the Gap. Turns out, that the same day yet another company was also hit with a board diversity shareholder derivative lawsuit, this time involving the board of directors and Chief Executive Officer of the medical and industrial product company Danaher Corporation. The Danaher lawsuit is in many ways substantially similar to the prior lawsuits that have been filed against companies that have no African-Americans on their boards of directors; however, the Danaher lawsuit is the first filed against a company outside California (Danaher is based in the District of Columbia), and it was filed by a different law firm than the one that had filed all of the prior board diversity suits. The complaint in the Danaher action can be found here.
Continue Reading Yet Another Board Diversity Derivative Lawsuit, This Time Against Danaher’s Board

In the latest in a series of lawsuits against high-profile companies alleging that the companies’ boards lack African-American directors, a plaintiff shareholder has filed a shareholder derivative lawsuit against the board of directors of the clothing retailer, The Gap. The lawsuit is substantially similar to the lawsuits filed by the same plaintiffs’ law firm against Oracle (here), Facebook (here), Qualcomm (here), and NortonLifeLock (here). A copy of the lawsuit against The Gap’s board can be found here.
Continue Reading The Gap Hit with Board Diversity Derivative Lawsuit

Cybersecurity firm NortonLifeLock became the latest company to be hit with a shareholder derivative lawsuit alleging that, despite company statements about its  commitment to diversity and inclusion, the company’s board and senior management lacks racial diversity. The NortonLifeLock lawsuit follows after substantially similar lawsuits – filed by the same law firm – were previously filed against Oracle (about which refer here), Facebook (here), and Qualcomm (here). A copy of the August 5, 2020 lawsuit against NortonLifeLock’s board can be found here.
Continue Reading NortonLifeLock Hit with Board Diversity Derivative Suit

In the latest in a series of lawsuits that recently have been filed against corporate directors based on board diversity issues, a Qualcomm shareholder has filed a derivative lawsuit against the company’s board, alleging that the company’s directors violated their duties to the company and shareholders by falling short of stated objectives on diversity and inclusion and by falling to include a single African-American either on the board or among the company’s senior officers. The lawsuit against Qualcomm follows similar lawsuit filed earlier this month against Oracle and Facebook. A copy of the July 17, 2020 complaint against the Qualcomm board can be found here.
Continue Reading Qualcomm Hit with Board Racial Diversity Derivative Lawsuit

In a recent post (here), I discussed the shareholder derivative suit filed against the board of directors of Oracle Corporation based on the alleged lack of racial diversity on the company’s board. Turns out that in addition to the lawsuit against Oracle’s board, the law firms that filed the Oracle lawsuit also have  filed a shareholder derivative lawsuit against Facebook’s board alleging that the directors had violated their fiduciary duties by their inaction on diversity and inclusion issues; their tolerance of racially discriminatory practices both in its workforce and on its platform; and their failure to take action on hate speech on its platform. Along with the Oracle lawsuit, the new lawsuit against Facebook provides another example of how the current heightened focus on diversity and inclusion issues can translate into D&O claims. A copy of the complaint in the Facebook action can be found here.
Continue Reading Facebook Board Hit with Derivative Lawsuit on Board Diversity and Other Race-Related Issues

After the recent civil disturbances and social unrest, there has been a renewed focus on equality and diversity issues. Among many other things, investors and activists are raising concerns about the lack of racial diversity on corporate boards. For example, just last week, a California legislator introduced a bill that would require corporations to include on their boards persons from “underrepresented communities.” Now, in addition to these legislative efforts, an activist investor seeking to advance board diversity objectives has launched a shareholder derivative lawsuit against the directors of Oracle Corporation, accusing the board of violating their legal duties by failing to diversify the company’s board and otherwise failing to address diversity and equality issues. A copy of the investor’s complaint can be found here.
Continue Reading Oracle Directors Hit with Derivative Suit on Board Diversity Issues