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  10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2627 28 Nicole Lavallee (SBN 165755) BERMAN TABACCO 44 Montgomery Street, Suite 650San Francisco, CA 94104 PENSION PLAN and TEAMSTERS LOCAL 272 LABOR MANAGEMENT PENSION FUND, Plaintiffs, vs. “form L. HENNESSEY; L. JOHN DOERR; ALAN R. MULALLY; KAVITARK RAM SHERAM; LAWRENCE E. PAGE; SERGEY BRan; ANN MATHER; DIANE B. GREENE; ROGER W. FERGUS 0N, JR. ; SUNDAR PICHAI; and ERIC EMERSON SCHMJDT, Defendants, and ALPHABET, INC. Nominal Defendant. clometti@cohenmilstein.com Telephone: (415) 433—3200; Facsimile: (415) 433-6382 Email: n1avallee@bermantabacco.com [Additional Counsel 6n Signature Page] NORTHERN CALIFORNIA PIPE TRADES Julie Goldsmith Reiser (pro hac vice t0 be submitted) Carol V. Gilden (pro hac vice t0 be submitted) Christopher Lometti (pro hac vice to be submitted) COHEN MILSTEIN SELLERS & TOLL PLLC 1100 New York Avenue NW, Suite 500 Washington,D.C. 20005 EE B elephone: (202) 408—4600;.Facsimile: (202) 408—4699 SAN MATE Email: jreiser@cohenmilsteln.com _ o COUNTY cgilden@cohenmilstein.com JAN O 9 2 019Clerk of m Attomeysfor Plaintifiv Northern California Pipe Trades Pension Plan and Teamsters Local 272 Labor Management Pension Fund 33’ FAX SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN MATEO CaseNo. 19C|V09149 VERIFIED STOCKHOLDER DERIVATIVE COMPLAINT FOR: (1) BREACH 0F FIDUCIARY DUTY; (2) UNJUST ENRICHMENT; and (3) CORPORATE WASTE JURY TRIAL DEMANDED ' i_géc|v—nu149 . 6MP 1 Complaint _(“iiiIImuuuummmlmnu 2441 704 V3 VERIFIED STOCKHOLDER DERIVATIVE COMPLAINT  23 24 25 2627 28 TABLE OF CONTENTS I. INTRODUCTION ...................................................................................................... 2 II. JURISDICTION AND VENUE.” .................................................. I ............................ 8 III. PARTIES ............................................................................................................... . ...... 9 A. Plaintiffs .................................. ; ..................................... ‘ .................................. 9 B. Defendants ....................................................................................................... 9 IV. FACTUAL ALLEGATIONS; .................................................................................. 17 A. Alphabet’s Re utation as a “Good” Company is Key to Recruiting Valuable Emp oyees and Collectlng the UserData that Powers Its Products ......................................................................................................... 17 B1 Defendants Breached their Fiduciary Duties by Protecting find Rewarding Male Harassers ............................................................................ 19 1. The Board Has Allowed a CUlture Hostile to Women to Fester for Years ............................................................................................. 19 a) Sex Discrimination in Pay and Promotions: ........................... 20 b) Sex Stereotyping and Sexual Harassment: .............................. 23 2.. The New York Times Reveals the Board’s Pattern of Shielding MaLe Executives Accused of Sexual Harassment .............................. 27 3. Alphabet Employees Express Outrage at the Board’s Conduct ......... 30‘ C. Defendants Breached their Fiduciary Duties by Hiding the Google+ Breach From the Public ................................................................................. 33 1. Alphabet’s History ofConcealing Data‘Privacy Issues Had Already Resulted in Heightened Legal Scrutiny and Penalties ......... 34 2. The WSJ reveals Defendants breached their fiduciary duties to the Companfi and their legal obligations by knowingly concealingt e Goog1e+ breach to avoid regulatory scrutiny ............. 35 3. Lawmakers Investigate Whether Alphabet’s Concealment Violates the FTC Consent Decree or Other Data Protection Laws ................................................................................................... 38 V. THE INDIVIDUAL DEFENDANTS BREACHED THEIR FIDUCIARY DUTIES .................................................................................................................... 4O A. The Individual Defendants Breached Their Fiduciary Duties to the Company ........................................................................................................ 4O B. The Individual Defendants Breached their Duties of Reasonableand Prudent Supervision ....................................................................................... 41 _i_2441 704 v3 VERIFIED STOCKHOLDER DERIVATIVE COIVIPLAINT  C. The Individual Defendants Violated Google’s Corporate Governance Guidelines ...................................................................................................... 42 D. The Individual Defendants ViolatedGoogle’s Code of Conduct by Permitting the Company to Engage 1n Unlawful Acts .................................. 43 E. The Audit Committee Defendants Breached the Duties Imposed by the Audit Committee Charter by Permittlng Alphabet to Engage in Conduct in Violation of the Law ................................................................... 44 F. The Leadership Development. and Compensation Committee Defendants Breached the Dutles Imposed by the Leadershlp Development and Compensation Committee Charter by Approving Severance Payouts to Executives Who Should Have Been Terminated for Cause ........................................................................................................ 45 G. The Governance Committee Defendant Breached the Duties Imposed by the Governance Committee ChaITer ............ _ ............................................. 46 VI. DAMAGES TOTHE COMPANY .......................................................................... 48 A. Legal and Regulatory Penalties .......................................................... 48 1. Sexual Harassment and Discrimination ...... ' ....................................... 48 2. Data Privacy ....................................................................................... 49 B.Reputation, Goodwill, and Workplace Harm ................................................ 50 V11. DERIVATIVE ALLEGATIONS ............................................................................. 51 VIII. DEMAND FUTILITY ALLEGATIONS .................... 52 A. Demand is Excused Because Eagh of theIndividual DefendantsFaces a Substantial Likellhood of Liablllty ............................................................. 52 B. Demand is Excused Because a Maj ority of the Board is Not Independent ............................................ , ...................................................... 55 C. Demand is Excused Because the Board is Entirely Controlled by Defendants Page, Brin, andSchmidt ............................................................. 57 FIRST CAUSE OF ACTION ......................................... _. .................................................... 59 SECOND CAUSE OF ACTION ......................... V ................................................................ 60 THIRD CAUSE OF ACTION ............................................................................................. 61 PRAYER FOR RELIEF ...................................................................................................... 61 JURY DEMAND ................. ' ................................................................................................ 62 _ii_ 2441704 v3 VERIFIED STOCKHOLDER DERIVATIVE COMPLAINT  10 11 12 13 14 15 16171819 20 21 22 23 24 25 2627 28 Plaintiffs Northern California PipeTradesPension Plan (“NCPTPP”) and Teamsters Local 272 Labor Management Pension Fund (“Local 272”) bring this shareholder derivativeaction on behalf of nominal defendant Alphabet, Inc. (“Alphabet,” “Google,” or the “Company”l) against certain current officers and directors of the Company for breaches of fiduciary duty ahd a “culture ofconcealment” that led Defendants, in pursuit of their own interests, to participate or acquiesce in the cover-ups of a long-standing pattern of sexual harassment and discfimination by high-powered male executives as well as a sefious data breach, both of whichwere in violation of state and federal law. I Plaintiffs make these allegations upon personal knowledge as to their own actions and, as to all other matters, upon the investigation of their undersigned counsel which included, among other things, (1) review and analysis of Alphabet’s public filings with the U.S. Securities and Exchange Commission (“SEC”); (2) a reviewof press releases, news articles, and other public statements issued by or concerning Alphabet and theIndividual Defendants named herein; and (3) a review of court records, including, but not limited to pleadings filed inEllis v. Google, LLC, No. CGC—17— 561299 (Cal. Sup. Ct. San Francisco Cty.); Wicks v. Alphabet, Ina, No. 3:18-cv-6245 (N.Dj Cal.); El Mawardy v. Alphabet, Ina, No. 1:18-cv—5704 (E.D.N.Y.); Matic v. Google, LLC, No. 5:18- cv6164 (N.D. Cal); Patacsz'l v. Google, LLC, No. 5:18—cv-5062—EJD (ND. Cal.); Lee v. Google, Ina, CaseNo. 18-cv-323651 (Cal. Super. Ct. Santa Clara Cty.); and Ofice ofFederal Contract Compliance Programs, US. Dep’t 0f Labor v. Google, Ina, ALI Case No. 2017-0FC—08004, (“DOL”). On behalf of themselves and the stockholdersthey seek to represent, Plalintiffs allege as follows: l On August 10, 2015, Google announced plans to restructure its subsidiaries into holding company Alphabet, Inc. Certain of the events discussedherein occurred prior to the name change. Accordingly;Alphabet, Google and the Company are used interchangeably. -1- VERIFIED STOCKHOLDER DERIVATIVE COMPLAINT 2441 704 v3

431.pdf

Jan 11, 2019
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