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Alphabet, Inc., to pay $310M to resolve shareholder suits over sexual harassment, discrimination

By WK Editorial Staff

Plaintiffs alleged that current and former board members and officers participated in or acquiesced to a culture that fostered a long-standing pattern of sexual harassment and discrimination.

Alphabet, Inc., the parent company of Google, has finalized a $310 million settlement to resolve litigation related to sexual harassment and misconduct, according to Renne Public Law Group. The settlement provides for significant changes to company policy and commits the funding to diversity, equity, and inclusion efforts. It is said to be the largest and most holistic settlement in a shareholder derivative case stemming from sexual misconduct or harassment.

Shareholder suits. In January 2019, a law firm coalition represented plaintiffs in a series of lawsuits on behalf of Alphabet shareholders against the company alleging that its current and former board members and officers participated in or acquiesced to a culture that fostered a long-standing pattern of sexual harassment and discrimination. According to the plaintiffs, the directors’ and officers’ actions breached their fiduciary duties to shareholders and employees by reputationally and financially damaging the company.

The lead case, In re Alphabet Inc. Shareholder Derivative Litigation (Lead Case No. 19CV341522), was filed in the Santa Clara, California, Superior Court by Northern California Pipe Trades Pension Plan, Teamsters Local 272 Labor Management Pension Fund, and an individual shareholder.

Negotiations. A working group comprised of attorneys Julie Reiser (Cohen Milstein), Frank Bottini (Bottini & Bottini, Inc.), and Louise Renne and Ann Ravel (Renne Public Law Group) led the settlement negotiations. Judge James Kleinberg served as mediator.

Monetary commitment. The settlement provides for a $310 million funding commitment by Alphabet to diversity, equity, and inclusion over 10 years, the largest-ever public commitment by a tech company to these efforts.

Mandatory arbitration and NDAs. The settlement additionally eliminates mandatory arbitration for all Alphabet companies in any harassment, discrimination, or retaliation-related dispute, and limits Google’s use of non-disclosure agreements (NDAs).

Other reforms. The settlement also:

  • Creates a Diversity, Equity, and Inclusion Advisory Council;
  • Requires the adoption of best-in-class employment policies related to sexual harassment and misconduct;
  • Mandates sexual harassment and fiduciary duty training for the Board; and
  • Requires Alphabet to amend the charter of the Leadership Development and Compensation Committee to make explicit the committee’s mandate to promote a workplace environment free from employee discrimination.

“This settlement will not only change and improve the culture at Google, but it will set the standard for culture change at tech companies throughout Silicon Valley,” Ravel said. “With this settlement and the significant institutional changes Alphabet has made recently, the company is entering a new chapter. There have been shifts in leadership, and Alphabet has increased diversity on its board by adding two women, including one Black woman. I’m optimistic that this settlement will catalyze deeper institutional shifts at Alphabet and set a high bar for diversity, equity and inclusion efforts in Silicon Valley and beyond.”