Diversity In The Boardroom: A Litigation Update

In a prior alert, we noted that a number of shareholder lawsuits were brought during 2020 in which large corporations and their directors were accused of fiduciary breaches and securities law violations tied to the alleged failure to fulfill companies' diversity aspirations. On March 19, 2021, in the first ruling on a motion to dismiss in these actions, a California federal court dismissed claims against Facebook and its directors as failing to meet both substantive and procedural pleading standards.

The decision by Magistrate Judge Laurel Beeler in Ocegueda v. Zuckerberg, Case No. 20-cv-04444-LB (N.D. Cal. March 19, 2021), dismissed the federal claims with leave to amend and dismissed the state claims without prejudice to reassertion in the Delaware Court of Chancery. The decision is an initial indication that these suits face traditional hurdles to assertion of shareholder claims. Moreover, it raises questions as to whether the novel assertion