I mentioned the other day that there appears to be an emerging trend of plaintiff lawsuits alleging that boards of directors have committed various breaches of fiduciary duty and/or disclosure obligations in connection with their companies' diversity or lack thereof.
The invaluable Kevin LaCroix brings word of yet another suit, this time targeting Qualcomm:
... 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.
The complaint alleges that despite the company’s various public statements about the importance of diversity and inclusion, the company’s board includes no African-Americans (though it does include three women), and there are no African-Americans among the company’s top executives. Even the company’s Chief Diversity Officer is white. The company’s workforce is only 1.5% African American and the company has made no progress in increasing the number of African American employees since 2017. The problem, the complaint alleges, is that not just been lack of diversity but also discrimination against African Americans. ...
Like the complaints previously filed against Oracle and Facebook, this new complaint against Qualcomm is not directly tied to the current racial justice protests. There is no mention in the complaint to the Black Lives Matter movement. There is no reference to the complaint to the death of George Floyd or of the demonstrations and civil unrest that followed his death. However, the three complaint undeniably are linked to the current racial justice movement and are obviously being filed now because of the heightened visibility of racial diversity and inclusion issues as a result of the protests and demonstrations.
I am unaware of any cases determining whether either state law fiduciary duty claims or the federal disclosure claims of the sort brought here have merit. In any case, this is a very interesting development that bears watching.
