January 10, 2019

A proposed class of shareholders accused Google parent Alphabet's board of directors in California state court Wednesday of concealing data privacy issues and issues of sexual harassment and discrimination, ultimately propping up the stock price until the truth about these issues emerged.

The suit filed by two pension funds claims the Alphabet Inc. board breached its fiduciary duty and engaged in a "culture of concealment" resulting in the cover-up of a history of abuse and discrimination by high-powered male executives, as well as data breaches.

"Defendants' conduct has already cost the company hundreds of millions of dollars in generous exit packages to wrongdoers and exposed it to further litigation and a loss of federal contracts over its hostile and discriminatory workplace," the proposed class said. "Further, as studies have shown, such a toxic work environment can impact a company's ability to hire and retain top talent."

. . .

"Alphabet's leadership in the tech industry regrettably also includes leadership in a culture that limits opportunities for women," the shareholders said Wednesday. "Recent complaints about the company demonstrate that, for years, Alphabet's management has fostered a 'brogrammer' culture, where women are sexually harassed and valued less than their male counterparts."

. . .

The suit mentions that the company's stock took several tumbles following the revelations about the data breaches and the alleged discrimination.

In addition to claims of breaches of fiduciary duty, the suit accuses all defendants of unjust enrichment and the executives of corporate waste.

"We are hoping this lawsuit will create greater value for Alphabet's stockholders and will also ensure that the company demonstrates a greater commitment to a safe and fair workplace," Julie Goldsmith Reiser, a partner at Cohen Milstein Sellers & Toll PLLC who represents the shareholders, said in a release.

The shareholders are represented by Nicole Lavallee, Kristin J. Moody and A. Chowning Poppler of Berman Tabacco, and Julie Goldsmith Reiser, Carol V. Gilden, Christopher Lometti, Richard A. Speirs and Alice Buttrick of Cohen Milstein Sellers & Toll PLLC.