In the News

Alphabet, Inc. Shareholders Secure Historic Sexual Harassment and Governance Reforms Including $310M Fund

September 25, 2020

For Immediate Release:

Alphabet Board to Form Diversity, Equity and Inclusion Advisory Council Comprised of Executives,
Including CEO Sundar Pichai, and Renowned Outside Experts

Settlement Ends Mandatory Arbitration in Harassment, Discrimination and
Retaliation-Related Disputes for all Alphabet Entities

MOUNTAIN VIEW, Calif. – Google parent company Alphabet, Inc. (GOOG, GOOGL) will commit a record-setting $310 million to diversity, equity and inclusion (DEI) initiatives under a settlement with shareholders announced today. The agreement institutes sweeping policy reforms to ensure workplace equity and improve board oversight. It also establishes a DEI Advisory Council comprised of outside experts and Alphabet executives, including Chief Executive Officer Sundar Pichai.

The settlement resolves derivative litigation filed in three jurisdictions, including a derivative lawsuit filed last year against certain Alphabet officers and directors by national law firm Cohen Milstein Sellers & Toll. 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, Cohen Milstein represented lead plaintiffs Northern California Pipe Trades Pension Plan and Teamsters Local 272 Labor Management Pension Fund in the lawsuit.

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.

“The settlement fundamentally alters Alphabet’s workplace policies, including eliminating mandatory arbitration in harassment, discrimination and retaliation-related disputes and the use of one-sided non-disclosure agreements that silence victims and enable powerful harassers,” said Julie Goldsmith Reiser, Partner at Cohen Milstein Sellers & Toll and one of four plaintiffs’ counsel appointed to lead the global settlement negotiations. “These changes, along with the financial commitment to DEI initiatives, position Alphabet to lead as much in workplace equity as it is does in technology and innovation.”

Alphabet’s $310 million commitment to diversity, equity and inclusion over ten years constitutes the largest public commitment any tech company has made in this regard.  The Advisory Council’s oversight of the creation, implementation and ongoing operation of initiatives that support diversity, equity and inclusion will be guided by Hon. Nancy Gertner, a retired federal judge and Harvard Law School lecturer; Grace Speights, global leader of Morgan Lewis’s labor and employment practice and chair of the board of trustees at George Washington University; and Fred Alvarez, a former member of the Equal Employment Opportunity Commission and monitor of Uber’s settlement with the EEOC. Internal members will include Pichai; Kent Walker (Chief Legal Officer), Melonie Parker (Chief Diversity Officer) and Jen Fitzpatrick (SVP).

The Alphabet settlement also institutes governance measures to ensure that Alphabet’s board is informed of and accountable for overseeing risks arising from sexual harassment by executives and, more broadly, fostering a diverse, equitable and inclusive culture. Key changes include:

  • Expanding the Audit Committee’s charter to Audit and Compliance, with quarterly reports to the full board on legal and regulatory compliance; and,
  • Preventing employees with 10b5-1 stock purchase plans from amending the plans while they are subject to investigations or a lawsuit for sexual misconduct.

The case name in the Alphabet matter is: In re Alphabet Shareholder Derivative Litigation, Case No. 19CV341522, Superior Court of the State of California in and for the County of Santa Clara. It was heard by Superior Court Judge Brian C. Walsh.

A full copy of the complaint filed is available here. A full copy of the settlement is available here.

Ms. Reiser led the Cohen Milstein team that, earlier this year, received final approval for the $90 million settlement of a derivative lawsuit against the Wynn Resorts Ltd. board of directors. That settlement, stemming from the Wynn board’s alleged failure to properly handle longstanding allegations of sexual assault and harassment by founder Steven A. Wynn, also included landmark corporate governance reforms.

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About Cohen Milstein Sellers & Toll

Cohen Milstein Sellers & Toll PLLC is recognized as one of the premier law firms in the country handling major, complex plaintiff-side litigation. With more than 100 attorneys, Cohen Milstein has offices in Washington, D.C., Chicago, Ill., New York, N.Y., Palm Beach Gardens, Fla., Philadelphia, Pa. and Raleigh, N.C. For additional information, visit www.cohenmilstein.com or call 202.408.4600.