In a lengthy and detailed opinion, the Fifth Circuit has rejected two petitions challenging the SEC’s approval of Nasdaq’s board diversity rules. The rules require most Nasdaq-listed companies to have women and minority directors on their boards or explain why they don’t. The petitioners had argued that the rules violated constitutional free speech and equal

On June 1, 2023, in a much-anticipated decision, the Ninth Circuit held, in a split en banc decision in the long-running board diversity lawsuit filed against the board of The Gap, that the provision in the company’s bylaws designating a Delaware state court forum for derivative actions was enforceable, even as to claims asserted derivatively under Section 14(a), and, accordingly, the appellate court affirmed the district court’s dismissal of the action. The decision, which validates company’s use of these kinds of forum selection clauses, also creates a split in the federal judicial circuits which could mean that the issue could be headed to the U.S. Supreme Court. A copy of the Ninth Circuit’s decision can be found here.Continue Reading Ninth Circuit En Banc Ruling Upholds Forum Selection Clause

Virginia Milstead

In the following guest post, Virginia Milstead, a partner at the Skadden, Arps, Slate, Meagher & Flom LLP law firm, reviews and considers the implications of the May 13, 2022 verdict in Crest v. Padilla, in which the Los Angeles County Superior Court held that California’s statute requiring women on corporate boards violates the state constitution’s equal protection clause. A version of this article previously was published as a Skadden client alert; this version is updated to reflect the fact that the California secretary of state has indicated that she will appeal the court’s verdict. I would like to than the author for allowing me to publish her article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the author’s article.
Continue Reading Guest Post: California Trial Court Strikes Down Women on Boards Law

Over recent months, there has been a series of regulatory, legislative, and litigation measures and actions implemented to try to address perceived concerns about diversity in the corporate boardroom. Prominent among these measures was AB 979, the California board diversity statute for “underrepresented communities.” This California legislative measure was the subject to a legal challenge seeking to prevent the California secretary of state from expending taxpayer funds to enforce the measure, which, the taxpayer plaintiffs claimed, violated the equal protection clause in the California state constitution. In an interesting and detailed April 1, 2022 opinion (here), California Superior Court Judge Terry A. Green, granted the taxpayers’ motion for summary judgment, striking down the legislation on equal protection ground.
Continue Reading Court Strikes Down California Board Diversity Statute

As readers of this blog know, the various board diversity lawsuits that the plaintiffs’ lawyers filed in late 2020 and early 2021 have uniformly fared poorly in the courts. In the latest dismissal motion ruling in one of these suits, the court in the board diversity suit filed against the directors of Cisco Systems has granted the defendants’ motion to dismiss, albeit without prejudice. The court’s ruling in the Cisco Systems board diversity suit is noteworthy because the court addressed the merits of the plaintiff’s Section 14(a) claims. A copy of the court’s March 1, 2022 dismissal order can be found here.
Continue Reading Board Diversity Suit Against Cisco Systems’ Directors Dismissed

The directors’ and officers’ liability environment is always changing, but 2021 was a particularly eventful year, with important consequences for the D&O insurance marketplace. The past year’s many developments also have significant implications for what may lie ahead in 2022 – and possibly for years to come.  I have set out below the Top Ten D&O Stories of 2021, with a focus on the future implications. Please note that on Thursday, January 13, 2022 at 11:00 AM EST, my colleague Marissa Streckfus and I will be conducting a free, hour-long webinar in which we will discuss The Top Ten D&O Stories of 2021. Registration for the webinar can be found here. I hope you will please join us for the webinar.
Continue Reading The Top Ten D&O Stories of 2021

Starting last summer and through the early part of this year, plaintiffs’ lawyers filed several shareholder derivative lawsuits against the boards of a number of companies alleging that the directors had breached their fiduciary duties by failing to include African American individuals on their boards. As I have detailed in previous posts (most recently here), these suits have not fared well, as courts have granted the motions to dismiss each of the cases in which courts have ruled on dismissal motions. In the past week, the courts in two more of these cases – involving the boards of NortonLifeLock and OPKO Health – granted the defendants’ motions to dismiss. The August 30, 2021 order in the NortonLifeLock case can be found here and the September 1, 2021 order in the OPKO Health case can be found here.
Continue Reading Two More Board Diversity Lawsuits Dismissed

As I noted a prior post, on August 6, 2021, the SEC, in a split vote along party lines, approved Nasdaq’s proposed listing guidelines requiring companies listed on the exchange to comply with board diversity requirements or explain their failure to do so. On August 9, 2021 a nonprofit directors’ organization called the Alliance for Fair Board Recruitment filed a petition with the Fifth Circuit Court of Appeals seeking to have the appellate court review the SEC’s order. The organization explained its move in an August 18, 2021 press release, stating that it sought to challenge the order because it “will compel many of our nation’s largest publicly traded corporations to illegally discriminate on the basis of gender, race, and sexual orientation” in selecting directors. The appellate petition can be found here. The August 18 press release can be found here.
Continue Reading Court Challenge to Nasdaq Board Diversity Rules Filed

The topic of diversity on corporate boards has been the focus of a great deal of recent attention, discussion, and action. California has enacted legislation aimed toward more diverse boards; certain institutional investors have begun pushing for greater diversity in the boardroom; and there has even been litigation targeting companies whose boards are not diverse. In addition, last December, the Nasdaq securities exchange filed with the SEC a proposal requiring companies listed on its exchange to disclose whether the company is in compliance with the exchange’s diversity standards or to explain why it is not in compliance. On August 6, 2021, the SEC, in a vote split along party lines, approved the proposed Nasdaq guidelines, making the guidelines applicable to most of the nearly 3,000 Nasdaq listed company. The SEC’s August 6, 2021 order approving the guidelines can be found here.
Continue Reading SEC Approves Nasdaq’s Board Diversity Disclosure Requirements