ESG Litigation & Enforcement Tracking
Judge Dismisses Challenge to Diversity Policies
September 11, 2023 | National Center for Public Policy Research v. Schultz, et al., No. 2:22-cv-00267 (E.D. Wash. 2023).
Conservative think tank National Center for Public Policy Research’s claims against Starbucks were dismissed by a Washington federal judge who condemned the claims as a political attack. The plaintiff filed a shareholder derivative suit against certain Starbucks officers and directors that claimed that Starbucks’s effort to ensure that members of the BIPOC community made up at least 30% of the corporate workforce and 40% of the retail and manufacturing workforce by 2025 constituted racial discrimination and a breach of fiduciary duty. In its order dismissing the claims, the court noted that the plaintiff’s proposal did not have the support of the majority of Starbucks shareholders and that the question of whether DEI and ESG initiatives adequately address societal inequities was better decided by the political branches.
Delaware Chancery Court Denies Shareholder Request for Books and Records Concerning Florida “Don’t Say Gay” Legislation
June 27, 2023 | Simeone v. The Walt Disney Company, No. 2022-1120 (Del. Ch. 2023).
The Delaware Chancery Court denied a shareholder request made pursuant to 8 Del. C. § 220 for the pre-suit inspection of corporate books and records concerning Disney’s opposition to Florida’s “Don’t Say Gay” legislation, HB 1557, finding that the shareholder’s stated purposes in making the demand were “pretextual” and had been solicited by counsel. The shareholder contended that Disney’s fiduciaries put their own beliefs ahead of their obligations to shareholders in opposing HB 1557. The court found that the suit concerned a permissible business judgment by Disney’s board, further finding that there was no evidence the Disney board was conflicted, grossly negligent, or acted in bad faith in opposing HB 1557. The opinion also noted that the shareholder received all necessary documents for his purpose because Disney produced a series of board minutes and corporate policies.
Shareholder Files Federal Securities Class Action Complaint for Alleged “Greenwashing”
April 3, 2023 | Fagen, et al. v. Enviva Inc., et al., No. 8:22-cv-02844 (D. Md.).
A shareholder filed an amended proposed class action complaint against Enviva Inc., a wood pellet production plant that produces products that are used as a substitute for coal in power generation, for violations of Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act. The complaint contends that the plant misrepresented its environmental practices in investor marketing and engaged in “greenwashing” of its wood procurement and production, which allegedly caused losses in the value of common stock.
Shareholder Files Breach of Fiduciary Duty Suit Against Meta Platforms Inc.
October 3, 2022 | McRitchie v. Zuckerberg, No. 2022-0890 (Del. Ch. 2022).
A shareholder filed a putative class action against Mark Zuckerberg, Meta Platforms Inc., and Meta’s board of directors in the Delaware Chancery Court for direct and derivative claims of breach of fiduciary duty. The complaint alleges that Meta has ignored the interests of its diversified stockholders by focusing on company profits without considering social impact.
Shareholder Suit Against Deutsche Bank Alleging Oversight Deficiencies Settles for $26.25 million
September 27, 2022 | Karimi v. Deutsche Bank Aktiengesellschaft, No. 1:22-cv-02854 (S.D.N.Y. 2022).
In 2020, shareholders sued Deutsche Bank and recent chief executive officers alleging the bank materially misrepresented its “know-your-customer” and anti-money laundering controls, resulting in an artificial inflation of its stock price. The complaint also alleged that compliance staff was overruled in examining “high-risk” relationships with certain individuals, such as Jeffrey Epstein. The lawsuit settled for $26.25 million.