Dive Brief:

• Pinterest shareholders have taken the company to court, alleging it "maintained a systemic culture, policy, and practice of illegal discrimination on the basis of race and sex." This resulted in breach of fiduciary duty, waste of corporate assets, abuse of control and violation of the Securities Exchange Act of 1934, according to the Nov. 30 suit, which also named high-ranking company representatives.
• The federal lawsuit was filed by a Rhode Island pension fund and claims Pinterest’s "top executives and members of its Board of Directors" personally engaged in or knowingly ignored discrimination and retaliation against those who challenged the company’s "white, male leadership clique." The plaintiffs said three female executives were forced out of the company in retaliation for seeking pay equal to white males in similar positions.
• "As a result of Defendants’ illegal misconduct, the Company’s financial position and its goodwill and reputation among its largely female user base (which Pinterest’s success depends upon) were harmed and continue to be harmed," the shareholders said, noting that public scrutiny of Pinterest and press coverage of alleged discrimination at the company has continued for months, leading to a user boycott and a petition signed by 25,000 individuals demanding that the company increase the pay of African-American employees. 

Dive Insight:

An increasing number of shareholder lawsuits claiming that company officials allowed misconduct to occur, especially sexual misconduct in the wake of the "#MeToo" movement, have been filed, according to attorneys with law firm Seyfarth Shaw.

In October, for example, Alphabet, the parent company of Google, Inc., agreed to settle litigation alleging sexual harassment and misconduct for $310 million, according to one of the law firms involved in the litigation. The attorneys described the settlement as one of the largest in a shareholder derivative case stemming from sexual misconduct or harassment.

The Seyfarth attorneys suggested that employers review the board of directors’ role in preventing and responding to sexual harassment allegations. HR also can ensure that compliance programs are updated and distributed regularly and that internal investigations are robust, they added.