Alphabet deal is a model, say plaintiffs’ lawyers

Plaintiffs' attorneys said they hope a tentative settlement reached Friday in several shareholder lawsuits against Alphabet Inc. over its handling of sexual harassment allegations will serve as a model for other companies across the nation.

"It's designed to change the culture of not just in Silicon Valley but on Wall Street as well," said Joseph W. Cotchett, a partner with Cotchett, Pitre & McCarthy LLP, one of many plaintiffs' firms involved in the case. "We've never had formal commitments before."

The agreement to resolve the shareholder derivative lawsuits was the product of several compromises, said attorneys involved in the deal. In re: Alphabet Inc. Shareholder Derivative Litigation, 19CV341522 (Santa Clara County Sup. Ct., filed Jan. 24, 2019).

If the agreement is approved by a Santa Clara County judge, the Mountain View-based parent company of Google would maintain a "robust program designed to prevent and address sexual harassment, sexual misconduct and retaliation" that would end mandatory arbitration in harassment, discrimination, and retaliation disputes and require it to pay $310 million for a new advisory committee, training and oversight.

The agreement includes a limitation on confidentiality agreements when Alphabet settles sexual harassment and retaliation claims, permitting complainants to discuss the facts of their cases. That provision would not apply to other employment disputes, such as gender pay discrimination cases, however.

To reach a settlement, plaintiffs' attorneys dropped a demand that prompted the lawsuits -- an attempt to win reimbursement of the $105 million in severance packages that were paid to former Google engineers Andy Rubin, who helped create the Android operating system, and former search vice president Amit Singhal.

Francis A. Bottini Jr. of Bottini & Bottini Inc., one of the plaintiffs' attorneys who negotiated the deal, said the demand was dropped in favor of pursuing settlements aimed at ensuring future payouts would never happen again. Of the concession, he said the money "would have come from their insurance companies, not them," assuming such a legal effort had been successful.

While the settlement is not unique, as similar arrangements have been reached with 21st Century Fox Inc. and Wynn Resorts Ltd. in 2017, Bottini said this agreement is more sweeping. "It's an historic settlement and more comprehensive," he said.

The deal will establish and maintain a Diversity, Equity, and Inclusion Advisory Council for five years. It will include, for the first year, company CEO Sundar Pichai, other Alphabet executives including chief legal officer Kent Walker, and three outside members with expertise in diversity, equity and sexual harassment.

The three outside members include retired federal judge Nancy Gertner of the District of Massachusetts and Fred W. Alvarez, a partner with Coblentz Patch Duffy & Bass LLP, a former commissioner of the U.S. Equal Employment Opportunity Commission.

One of the terms of the agreement is sexual harassment training for the board of directors, which Bottini said was designed to teach best practices and corporate governance issues.

Eileen Naughton, Alphabet's vice president of people operations, hailed the agreement in a blog post. "The changes we've made to build a more equitable and respectful workplace include overhauling the way we handle and investigate employee concerns, introducing new care programs for employees who report concerns, and making arbitration optional for Google employees," she wrote.

Santa Clara County Superior Court Judge Brian C. Walsh is scheduled to consider the proposed settlement Oct. 22.

Julie Goldsmith Reiser, a partner with Cohen Milstein Sellers & Toll PLLC, co-led the team that negotiated the settlement with Alphabet's attorneys, who were led by Boris Feldman of Freshfields Bruckhaus Deringer and Benjamin M. Crosson of Wilson Sonsini Goodrich & Rosati PC.

Cotchett credited JAMS neutral James P. Kleinberg, a former Santa Clara County judge, with helping hammer out the deal. "Without his efforts, this would never have happened," he said.

James M. Finberg, a partner with Altshuler Berzon LLP who is not involved in the case, said the agreement lacks external monitoring by a court. Still, "there are some productive things here," he said. "Hopefully, it works out."