Recent shareholder lawsuits against Google parent company Alphabet Inc. mark the latest of a new approach in tackling sexual harassment allegations in the #MeToo era.

The lawsuits, both filed in San Mateo Superior Court in California, accuse Alphabet board members of breaching their fiduciary duty by covering up a lengthy pattern of gender discrimination and sexual harassment perpetrated by Google executives. Such activity, the derivative suits allege, had adverse impact on company profits and ability to hire and retain top talent and also exposed it to lawsuits and regulatory action.

“The board knowingly participated in or acquiesced to conduct by the Company's senior executives that caused the company to violate various laws,” said one of the suits, filed by attorneys at Berman Tabacco and Cohen Milstein Sellers & Toll. “Defendants' conduct has already cost the company hundreds of millions of dollars in generous exit packages to wrongdoers and exposed it to further litigation and a loss of federal contracts over its hostile and discriminatory workplace.”

The Cohen Milstein Alphabet lawsuit marks what Kevin LaCroix, vice president at management liability group RT ProExec, calls “the latest in a series” of derivatives suits “that has coincided with the rise of the MeToo movement.” starting with a suit against 20th Century Fox over the board's management of sexual harassment allegations.

“Most of the cases that have been filed so far have been filed in the context of these very high profile cases where there's already been a lot of publicity,” LaCroix said, “There's been enough revelations, and there continues to be revelations, that I think we could continue to see these kinds of cases for a while.”

Yet LaCroix said “derivative suits are hard to sustain” and subject to a number of “substantive defenses,” such as the business judgment rule, which is “a pretty high standard.” If the case just comes down to claimants' disagreement with “reasonable business judgement of the business decision makers,” he said, “it's not the court's job to second guess.”

“These are not slam dunks by any means. In these cases, it helps that there's been all this adverse publicity already because the emotional weight kind of goes on the plaintiffs side and they can try to portray themselves as on the side of the angels,” he said.

As to why shareholders may be taking this approach, LaCroix added: “That's probably because they looked at one of the absolute indispensable things they would need to bring a securities class action lawsuit would be a significant shareholder [claim] directly tieable to the news of misconduct. And they may have decided, Google's price has been bouncing all over the place the last few months. They may have just decided it may have been too hard to tie any specific movement to these specific circumstances, so they're better off filing a derivatives lawsuit so they won't have to worry about that price causation issue.”

An Evolving Approach to Harassment Claims

Among the companies that have faced derivative suits due to sexual harassment allegations are the Weinstein Co. over allegations against founder Harvey Weinstein; CBS over allegations against former CEO Les Moonves; and Wynn Resorts, Ltd., whose CEO, Steve Wynn was accused of a pattern of sexually harassing and abusing employees. The Wynn case was brought by Cohen Milstein, who also brought one of the suits against Google.

Julie Reiser, a Cohen Milstein attorney involved in her firm's Alphabet suit, said a derivative suit is “an effective tool” in making sure companies follow employment laws, though noted that holding company's boards of directors accountable for sexual harassment allegations has traditionally been a struggle.

“For sexual harassment lawsuits, the history was very bleak in terms of trying to hold a company's board of directors accountable,” she said. ''One of the things that is frequently missing in the conversation is the fact that sexual harassment is a violation of employment discrimination laws.”

Reiser says derivative suits are more traditionally used to go after foreign corrupt practices, such as the suit targeting Walmart with allegations that directors bribed Mexican officials to expedite store construction in Mexico.

As for derivative suits related to sexual harassment allegations preceding MeToo, she pointed to a case involving INC Pharmaceuticals and leadership that began in 1998.

The “court there basically said, 'Yeah, eight women have come and sued [the company] for sexual harassment and claimed damages, who knows if their accounts are credible? I'm not going to make that assessment.' And the Delaware Supreme Court [said] even if their accounts aren't credible or are, that's a business judgment: Of course the board should feel free to handle this as they see fit.”

Added Reiser: “I just think we've evolved past that now.”

Louise Renne, one of the plaintiffs attorneys that brought the second derivatives suit against Alphabet and its leadership, likewise thinks that more derivative suits over sexual harassment allegations will follow against Google. Renee's complaint—which also lists Francis Bottini Jr. as representing the plaintiff—contains minutes from shareholder committees involved in determining the $90M severance payout of Andy Rubin, who created Google's Android operating system, though the notes are currently under seal.

“In the past, shareholder derivative suits have been used very often to make sure there's improved corporate governance. Here, we're saying one part of corporate governance is that when you have admitted sexual harassment and or misconduct, it's up to the board of directors who are in charge of the company to take appropriate action. In this case, the Google board of directors did not. In fact they affirmatively took the wrong action by rewarding the bad conduct,” Renne said.

“This lawsuit will be, I believe, an important part of the MeToo movement because the goals are aligned—we're saying in our lawsuit [when] women and or anybody … is mistreated through sexual misconduct, appropriate action needs to be taken.'

Google didn't respond to a request for comment.