Lawsuits Targeting the Board over Sexual Harassment are ‘Expanding’

Lawsuits Targeting the Board over Sexual Harassment are ‘Expanding’

October 30, 2023, Agenda

Mark Gimbel’s commentary was included in an Agenda article covering how lawsuits are increasing against company board members claiming they breached oversight duties regarding sexual harassment. Mark analyzes how boards of directors can take steps to limit litigation risk.

Recent derivative cases in the Delaware Chancery Court have alleged that directors failed to exercise oversight in the face of “red flags” relating to pervasive sexual harassment, Mark said. He goes on to explain that “to plead a viable claim that will survive a motion to dismiss, plaintiffs have to show that a board acted in bad faith by consciously ignoring red flags, or utterly failed to put reporting systems in place.”

As a result, Mark advised that “to mitigate litigation risk, boards of directors should ensure that they have reporting systems in place to address instances of sexual harassment and similar misconduct.”