Cisco Diversity Suit Dismissed

Another shareholder derivative suit claiming diversity shortcomings within the company was dismissed last week: A judge in the Northern District of California dismissed allegations that Cisco Systems Inc. falsely and improperly represented itself as an industry leader in diversity.

Unlike other derivative complaints alleging corporate failure to foster a diverse corporate environment, however, this case was not dismissed for failure to make a demand on the board.  Rather, here, the plaintiff did make such a demand, but, after conducting an investigation of its allegations, the board rebuffed its claims. The plaintiff's complaint alleged the board had wrongfully refused their demand, the company moved to dismiss under Rule 23.1, and the individual board member defendants filed a separate motion to dismiss on Rule 12(b)(6) grounds.