A shareholder lawsuit filed Thursday claims that Alphabet’s board of directors, including Larry Page, Sergey Brin, and Eric Schmidt, covered up sexual harassment by numerous Google executives, including Andy Rubin, whose $90 million exit package was approved by the board after an internal investigation found sexual harassment claims against Rubin credible.
At a press conference in San Francisco, attorneys representing Alphabet shareholder James Martin said that Page and Brin, the company’s cofounders, were among the people directly involved in the cover-up and should compensate shareholders for the value lost when Alphabet shares declined after the payments to Rubin and others were revealed.
The lawsuit is supported by nonpublic evidence, including minutes from Alphabet board meetings in 2014 and 2016, obtained through a shareholder inspection demand. In the public filing, the minutes are heavily redacted, which Google demanded as a condition of providing the documents. But attorney Frank Bottini, managing partner at Bottini & Bottini, said he hopes the judge will unseal the information.
“You won’t believe what’s in these minutes,” Bottini said.
The minutes cover both meetings of the full board, as well as its leadership development and compensation committee, which approved payments to Rubin. The meetings from 2014 concern Rubin, while the 2016 minutes concern Amit Singhal, another Google executive who left after harassment complaints that the company did not publicly acknowledge at the time.
Bottini’s theory is that had Rubin been fired for cause, he would have exposed sexual misconduct allegations against other executives and directors, including Schmidt, the company’s former executive chairman, and David Drummond, its chief legal officer, who were both referenced in an October New York Times investigation, which first reported the $90 million payment to Rubin.
The lawsuit is seeking significant changes to Google’s corporate governance, including allowing non-management shareholders to nominate at least three new board members and changes to the company’s stock structure, which gives Page and Brin a supermajority voting share. The suit also asks that Rubin and others return their severance payments.
The complaint was filed in San Mateo County, California, Superior Court on Thursday. In a statement, Rubin’s lawyer Ellen Winick Stross said the lawsuit mischaracterizes Rubin’s departure from Google. “Andy left Google voluntarily and, in the severance negotiations there was no mention of a harassment complaint,” she said.1 Google did not respond to a request for comment.
Alphabet’s board is facing another recent shareholder lawsuit related to severance payments to Rubin and other executives accused of harassment. That suit was filed in San Mateo on Wednesday on behalf of two pension funds that own Alphabet stock, the Northern California Pipe Trades Pension Plan and Teamsters Local 272 Labor Management Pension Fund. Both lawsuits accuse the board of breach of fiduciary duty, unjust enrichment, and corporate waste.
The reports of Rubin’s $90 million severance package, and other harassment allegations inside Alphabet, incited a backlash at the company. In November, 20,000 workers in dozens of Google offices around the world walked out to demand better policies, holding signs saying things like “Happy to quit for $90M—no sexual harassment required.”
After the protest, Google CEO Sundar Pichai said the company would change its policies to allow alleged victims of sexual harassment or assault to file lawsuits, rather than force them into private arbitration. The new policy is limited to individual lawsuits, so class action cases are still restricted. Walkout organizers say the changes fall short of their demands. At the press conference, attorneys said they were also seeking an end to arbitration agreements and non-disclosure agreements that prevent openness and transparency and allow victims to discuss bad conduct without getting fired, demoted, or transferred.
1 UPDATE, Jan. 11, 1AM: This article has been updated to include a statement from Andy Rubin’s lawyer.