Overview
On November 30, 2020, the Honorable Brian C. Walsh of the Superior Court of the State of California in and for the County of Santa Clara granted final approval to a precedent-setting settlement that includes a $310 million funding commitment and sweeping workplace and corporate governance reforms in In re Alphabet Shareholder Derivative Litigation.
As a part of the settlement, Google parent company Alphabet, Inc. has agreed to significant changes to improve workplace equity and board oversight. It also establishes a diversity, equity, and inclusion (DEI) Advisory Council comprised of outside experts and Alphabet executives, including Chief Executive Officer Sundar Pichai.
The settlement resolves shareholder derivative litigation filed in three jurisdictions, including a derivative lawsuit filed on January 9, 2019 against certain Alphabet officers and directors by Cohen Milstein. Alphabet stockholders alleged that the tech giant violated their fiduciary duties by enabling a double standard at Alphabet that allowed powerful executives to sexually harass and discriminate against women without consequence. Appointed co-lead counsel on May 16, 2019, Cohen Milstein represented lead plaintiffs Northern California Pipe Trades Pension Plan and Teamsters Local 272 Labor Management Pension Fund.
Through the settlement, Alphabet will implement sweeping reforms to the company’s employment policies, eliminating practices that silence victims and implementing measures to fairly apply workplace policies even for the most senior executives. Among other things, the settlement:
- Ends mandatory arbitration in harassment, discrimination and retaliation-related disputes between any Alphabet company and an employee or extended workforce member;
- Limits Google’s use of non-disclosure agreements, so that employees are able to discuss the underlying facts and circumstances of an incident and the reporting process; and
- Calibrates corrective action recommendations across business units to ensure consistent consequences for the same misconduct.
At the final approval hearing, Judge Walsh described the settlement as, “groundbreaking,” “extremely valuable,” “comprehensive,” and codifying a “best in class approach . . . to address sexual harassment, sexual misconduct, discrimination, retaliation, inequity and inclusion in the workplace.” He commended the “excellent counsel” and stated that “[a]chieving such a settlement” is “a credit to what . . . your profession can do to solve a problem.”
Case Background
On January 9, 2019, Cohen Milstein and Berman Tabacco, acting as local counsel, filed a shareholder derivative lawsuit on behalf of the shareholders of Alphabet, Inc. (NASDAQ: GOOGL; GOOG), against Alphabet’s Board of Directors.
The Plaintiffs, including Cohen Milstein clients’, Northern California Pipe Trades Pension Plan and Teamsters Local 272 Labor Management Pension Fund, are current stockholders of the Company. They allege that the tech giant violated state and federal law through its secretive practices regarding both issues of workplace sexual harassment and a serious data breach.
The shareholders filed this derivative lawsuit—a lawsuit in which shareholders step into the shoes of the Company to enforce their right to bring about corporate governance changes— to challenge the “culture of concealment” that has permitted serious problems to fester at Alphabet.
Specifically, shareholders seek redress from the injury and losses that they allege were sustained by Alphabet as a result of breaches of fiduciary duty and “culture of concealment” that led Defendants to pursue their own interests and participate or acquiesce in the cover-up of a long-standing pattern of sexual harassment and discrimination by high-powered male executives. The complaint notes that Alphabet’s directors and officers have failed to adequately respond to several other sex discrimination and sexual harassment issues at the Company.
The lawsuit also alleges that Alphabet failed to disclose a data privacy breach that exposed the personal data of a half a million users of Google+, a social networking website operated by the Company, in violation of a Consent Decree the Company entered into with the Federal Trade Commission in 2011.