Qualcomm Escapes Diversity Suit

Another diversity-based derivative suit was dismissed this week by a federal district court, joining a list of decisions that have rejected similar shareholder allegations.

This most recent decision, from the District of Delaware, dismissed claims alleging Qualcomm Inc. had allowed unlawful and discriminatory practices to exist within its executive ranks.  Though the complaint was initially filed in the Southern District of California, Qualcomm's Bylaws contain a forum-selection provision designating Delaware as the exclusive forum for derivative litigation, and thus the case was transferred to Delaware in March 2021.

The complaint alleged that Qualcomm's directors violated Section 14(a) of the Exchange Act and SEC Rule 14a-9 by including materially misleading statements in their 2019 and 2020 proxy statements.  These statements involved the company's goal of increasing board diversity, such as by the governance committee including women and racially/ethnically