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Report: Shareholders Are Increasingly Suing Companies Over Lack Of Diversity


According to a report from Bloomberg Law, an increasing number of shareholders are looking to the courts to help increase diversity in the workplace. These types of lawsuits are generally filed on the basis that a poor work environment contributes to a lack of diversity and, in the long-run, causes fundamental damage to the company. Several major companies have recently been sued by shareholders over their workplace practices. Below, our West Palm Beach shareholder dispute attorney highlights the key things to know about the report.

A Recent Example: Tesla Facing Major Shareholder Lawsuit

 In June of 2022, a Tesla shareholder filed a lawsuit against the company alleging that “toxic workplace culture” was damaging to the interests of investors. The specific lawsuit in question, which was filed in a federal court in California, is centered around two main arguments:

  1. Tesla’s toxic workplace culture is driving away key talent; and
  2. Tesla’s toxic workplace culture is exposing the company to a liability risk.

The shareholder lawsuit is related to recent allegations for race discrimination and race-based harassment at a Tesla factory site in Northern California. There is separate employment law litigation ongoing regarding this matter.

A Trend to Watch: Shareholders Filing Lawsuit for Employment-Related Matters 

Issues related to a toxic workplace environment—race discrimination, gender discrimination, sex harassment, etc—have long been a focus of employment. However, over the last several years, there has been a growing trend of these issues becoming a central part of shareholder litigation. A shareholder can file a lawsuit against a corporation if improper conduct by executives or other key decision-makers have fundamentally damaged their financial interests. Poor employee practices can be the basis of a successful shareholder lawsuit.

A recent high profile example is a shareholder settlement reached by Alphabet Inc―the parent company of Google. In 2020, Google settled a major sexual harassment case that involved shareholder litigation. As part of that settlement, the company agreed to invest $310 million into diversity, equity, and inclusion (DEI) initiatives.

 Employment Law Matters are Likely to Remain a Big Part of Shareholder Litigation

 Google and Tesla are far from the only major companies that have dealt with shareholder disputes over employment law matters. Many other firms have been sued by shareholders for alleged mishandling of discrimination, sexual harassment, and lack of diversity more generally. It is expected that employment law matters will remain a big part of shareholder litigation going forward. A company that causes damage to shareholders through misconduct could face significant legal liability through a shareholder lawsuit.

 Get Help From Our Florida Shareholder Rights Lawyer Today

At Pike & Lustig, LLP, we are skilled and effective advocates for shareholders. If you have any questions or concerns about a shareholder dispute, we are here as a resource. Reach out to us by phone or send us a direct message to set up a confidential review of your case. With law offices in West Palm Beach, Wellington, and Miami we handle shareholder disputes throughout Florida.



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