US judge tentatively approves settlement in Pinterest diversity case

A federal judge in San Francisco on Thursday tentatively signed off an agreement that requires Pinterest to make several reforms to increase diversity, equity and inclusion in its workplace and content.

"We are very pleased that Judge [William H.] Alsup has given preliminary approval of the settlement and we believe that the terms of the settlement will result in better corporate governance at Pinterest and move toward eliminating the problems that our lawsuit sought to address," said Louise H. Renne, who served as interim liaison counsel for the interim lead plaintiff: the Employees' Retirement System of Rhode Island.

Among the terms of the deal, Pinterest will commit $50 million for the creation, implementation and maintenance of the reforms to increase diversity, equity and inclusion in its workplace and content. The company agreed not to require employees to abide by nondisclosure agreements when they bring claims of race or gender bias. The company said it would increase director oversight to ensure the reforms are put in place. In re: Pinterest Derivative Litigation, 3:20-cv-08331, (N.D. Cal., filed Nov. 25, 2020).

Attorneys from Freshfields Bruckhaus Deringer US LLP represent Pinterest and did not respond to calls or emails Thursday requesting comment.

Renne, a founding partner of the Renne Public Law Group and a former city attorney for San Francisco, wrote in court papers that this is the first settlement of its kind to make diversity, equity and inclusion an audited function, requiring Pinterest's internal auditing body to report annually to the board of directors on how much progress the company is making towards implementing its reforms.

The shareholder litigation was filed after several women, including one former executive, said Pinterest devalued and discriminated against women and people of color.

"Pinterest's discriminatory practices were publicly disclosed when two Black female members of Pinterest's public policy team came forward to publicly criticize the company's treatment of employees. ... The complaint alleges that both were paid substantially less than their white male colleagues," Renne stated in the motion.

"The complaint alleges that pay disparities and retaliation also impacted Francoise Brougher, the company's first chief operating officer who was hired by [Pinterest co-founder Benjamin] Silbermann with the board's approval due to her IPO experience," Renne continues.

Silbermann, with the approval of four board members, offered Brougher a compensation package that was less than the chief financial officer Todd Morgenfeld. After she complained, company executives fired her, according to the lawsuit.