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

As this blog’s readers know, one of the important corporate governance developments in recent months has been the heighted focus on board diversity. As part of this focus, several states have enacted statutory requirements addressing board diversity. The following guest post from Jessie K Liu, Susan Saltzstein, Lauren Aguiar and Tansy Woan of the Skadden, Arps, Slate, Meagher & Flom LLP law firm take a look at the various state and regulatory initiatives, and provide a survey overview of the relevant state legislation. This article updates a prior Skadden client alert. I would like to thank the authors for allowing me to publish their 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 authors’ article.
Continue Reading Guest Post: Diversity in the Corporate Boardroom:  A Current Scorecard

The shareholder derivative lawsuit filed against the directors of Danaher Corporation is the latest board diversity lawsuit to fail to survive initial pleading hurdles. In a June 28, 2021 order (here), District of Columbia District Court Judge Trevor N. McFadden granted the defendants’ motion to dismiss the shareholders’ claims, based on his determination that the plaintiffs had failed to establish that pre-suit demand on the board would have been futile. In making his rulings on the motion, Judge McFadden made several interesting and noteworthy observations about the plaintiffs’ board diversity allegations.
Continue Reading Board Diversity Lawsuit Against Danaher Directors Dismissed

Last summer, when California adopted a new law requiring corporations based in the state to add board members from “underrepresented communities,” it modeled the statute on the board gender diversity statute the state had enacted two years before. The constitutionality of the board gender diversity law itself had been challenged in a federal court lawsuit, but the court hearing the suit had dismissed it based on the named plaintiff’s lack of standing. However, in a June 21, 2021 opinion (here), the Ninth Circuit reversed the district court, finding that the claimant had sufficient standing to pursue the claim. The appellate court’s action has implications both for the board gender diversity statute and the more recently adopted board racial diversity statute, which has also been challenged in court.
Continue Reading 9th Circ. Revives Legal Challenge to California Board Gender Diversity Statute

Regular readers will recall that last year and earlier this year, plaintiffs’ lawyers filed a series of shareholder derivative lawsuits against the directors of several companies alleging that the lack of diversity on the companies’ boards breached the directors’ fiduciary duties. In the latest ruling to address preliminary motions in these various cases, the court in the board diversity lawsuit filed against directors and officers of Oracle has granted the defendants’ motion to dismiss. As discussed in greater detail below, the plaintiffs’ track record on the board diversity lawsuits is not good so far; the ruling in the Oracle suit represents the third successive dismissal granted in these suits.
Continue Reading Dismissal Motion Granted in Oracle Board Diversity Lawsuit

In the second dismissal motion ruling in one of the many board diversity lawsuits filed in recent months, a magistrate judge has granted the defendants’ dismissal motion in the suit against the board of clothing retailer The Gap. This latest ruling follows the dismissal motion grant last month in the similar lawsuit against Facebook’s board. As discussed below, the court’s dismissal of the case against The Gap’s board was based on the forum selection clause in the company’s bylaws. Northern District of California Magistrate Judge Sallie Kim’s April 27, 2021 ruling in the case can be found here.
Continue Reading Board Diversity Lawsuit Against The Gap Dismissed Based on Forum Clause

Sarah Abrams, Esq.

The pandemic’s disruption has had divergent effects on different population segments. In the following guest post Sarah Abrams, Esq., Director, Management Liability Markel, takes a look at the implication of this divergent population impact upon organizations’ diversity and inclusion efforts. The viewpoints expressed in the article are the authors alone and that not that of Markel. I would like to thank Sarah 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 Sarah’s article.
Continue Reading Guest Post: Achieving Organizational Diversity in the Wake of the Pandemic