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Oracle Wins Dismissal of Shareholders’ Board Diversity Suit

May 24, 2021, 7:53 PM

Oracle Corp. won dismissal of an investor lawsuit alleging the software company breached its fiduciary duty by failing to have meaningful diversity on its board and workforce.

The plaintiffs made “broad brush allegations” and didn’t plead specific facts to support claims that the company’s communications on diversity were false or misleading, Judge Jacqueline Scott Corley of the U.S. District Court for the Northern District of California said in an order Monday.

In addition, Oracle’s bylaws designate the Delaware Chancery Court as the only forum for shareholder complaints, the judge said.

The California federal court has dismissed similar diversity suits against Facebook and The Gap Inc. in recent months.

The plaintiffs, led by investor R. Andre Klein, alleged Oracle’s 2019 proxy statement misled investors about the company’s efforts to support diversity and inclusion.

The software company “has consistently refused to appoint Black individuals and minorities to its Board and to management positions within the company,” the suit said, among other allegations.

The plaintiffs didn’t support their claim that filing a demand letter with Oracle’s board to address diversity would have been futile, the judge added.

Attorneys for Oracle and the plaintiffs didn’t immediately return a request for comment.

The case is Klein v. Ellison, N.D. Cal., No. 20-cv-04439, order 5/24/21.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bloomberglaw.com

To contact the editors responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com; Roger Yu at ryu@bloomberglaw.com