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Pinterest Board Blamed in Suit for Toxic Workplace Culture (2)

March 30, 2021, 5:06 PMUpdated: March 30, 2021, 7:27 PM

A pension fund sued Pinterest Inc.'s board in Delaware, blaming it for a “toxic” and “broken” culture of “discrimination and retaliation” against female executives that has allegedly tarnished the social media giant’s reputation with its overwhelmingly female user base.

“The very notion of tolerating gender and racial bias by senior management” at a company that calls itself “the nicest place on the internet” should be “self-evidently anathema, illogical, and unacceptable,” according to the complaint made public Tuesday in Delaware Chancery Court.

But board members with long-standing ties to founder and CEO Ben Silbermann “opened the floodgates to a veritable tsunami of public outrage about Pinterest’s hypocrisy” by catering to his “rockstar” persona “rather than cross him and risk being excluded,” the partly redacted lawsuit says.

A Pinterest spokesperson declined to comment Tuesday.

The company’s senior leaders “personally engaged in, facilitated, or knowingly ignored the discrimination and retaliation against those who spoke up,” according to the 53-page complaint, which accuses the directors of abdicating their oversight duties out of loyalty to Silbermann.

The derivative suit stems from a discrimination case brought by ex-chief operating officer Francoise Brougher and complaints lodged by a former high-ranking policy official at the company, Ifeoma Ozoma.

Both women went public after allegedly learning they were making significantly less than their male counterparts. Pinterest said in December it would pay $20 million to resolve Brougher’s claims.

The shareholder suit, which echoes an earlier securities fraud case, was originally filed under seal March 24 by the Key West Police Officers and Firefighters’ Retirement Plan.

The pension fund previously sued Pinterest seeking internal files to bolster its claims. Company records show “the board had been tracking these and other complaints” since 2019, “but nobody challenged Silbermann and his cohorts in senior management,” the complaint says.

Cause of Action: Breach of fiduciary duty.

Relief: Damages, costs, fees, and interest.

Attorneys: The pension fund is represented by Bernstein Litowitz Berger & Grossmann LLP. Attorneys for the board haven’t made an appearance in the case, but Pinterest and its directors are represented in the separate securities case by Freshfields Bruckhaus Deringer US LLP.

The case is Key W. Police Officers’ & Firefighters’ Ret. Plan v. Silbermann, Del. Ch., No. 2021-0257, complaint unsealed 3/30/21.

(Updates with company's response in fourth paragraph. A previous update added additional reporting throughout.)

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editor responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com

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