The Santa Clara Superior Court granted final approval of Google parent company Alphabet Inc.’s $310 million settlement to resolve lawsuits related to sexual harassment and misconduct on Monday, closing out litigation and negotiations that stretched almost two years.
“The Alphabet settlement sets a high standard for diversity and inclusion efforts in Silicon Valley and beyond,” said RPLG Partner Louise Renne, who was a member of the group that led the settlement negotiations. “Since the lawsuit was filed, Google has already initiated significant institutional changes. The measures outlined in the settlement ensure that the company will enhance its efforts to deliver on its commitment to diversity.”
A coalition of law firms filed a series of lawsuits on behalf of Alphabet shareholders against the company in January 2019. This litigation 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. Plaintiffs held that 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 presided over in the Santa Clara Superior Court by the Honorable Brian C. Walsh. A working group comprised of attorneys Julie Reiser from Cohen Milstein, Frank Bottini from Bottini & Bottini, Inc. and Louise Renne and Ann Ravel from Renne Public Law Group led the settlement negotiations. Judge James Kleinberg served as mediator. Alphabet finalized the settlement on Sept. 25, and the Court preliminarily approved it on Oct. 22. Judge Walsh granted final approval of the settlement on Monday following the final fairness hearing. The plaintiffs’ motion for an award of attorney fees and costs will be considered in a separate hearing on Feb. 4, 2021.
The settlement is the largest and most holistic settlement in a shareholder derivative case stemming from sexual misconduct or harassment. Key measures include: the elimination of mandatory arbitration in any harassment, discrimination or retaliation-related dispute for all Alphabet companies; the formalization of a Leadership Development and Compensation Committee and an Audit and Compliance Committee; the creation of an Employee Disciplinary Committee and a Corrective Action Committee; and the establishment of a Diversity, Equity and Inclusion Advisory Council. The settlement also requires that Alphabet spend a total of $310 million over up to 10 years on diversity, equity and inclusion-related initiatives.
The Court found that the settlement is fair and reasonable to Alphabet shareholders considering the benefits it provides in relation to the risk of continued litigation. “The settlement provides significant value to Alphabet in the form of meaningful governance reforms and financial commitments addressed to the issues giving rise to these actions,” the order states. “Ultimately, the Court believes that preventing further incidents like those described by plaintiffs will be more valuable to the company and its shareholders than any likely financial recovery in this action, and it appears that the reforms negotiated by the parties are well-designed to accomplish this.”
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