Oracle corporation logo on the building of new Czech headquarters June 18, 2016 in Prague, Czech Republic.

This story was updated Friday morning with details of a similar suit against Facebook Inc.

If Oracle admitted that it does not want Black board members, "it would be racist but honest," says a shareholder suit against the company and certain directors alleging that its false commitment to diversity has financially harmed investors. 

The suit comes as corporate America reckons with calls for greater diversity and support for minority workers in light of escalating racial tensions across the country, resulting in some business leaders such as Reddit co-founder and board member Alexis Ohanian stepping aside to make way for Black and diverse talent. 

A 106-page complaint filed Thursday in the U.S. District Court for the Northern District of California begins with photos of each member of Oracle's mainly white board of directors. The lawsuit names more than a dozen executives and directors including Oracle co-founder Larry Ellison, CEO Safra Catz and vice chairman Jeff Henley.

"In short, Oracle remains one of the oldest and most egregious 'Old Boy's Club' in Silicon Valley," wrote lawyers from Bottini & Bottini in La Jolla, California, and Renne Public Law Group in San Francisco. "A sign advising applicants 'Blacks Need Not Apply' might as well hang at the entrance to the company's headquarters at 500 Oracle Parkway in Redwood Shores, California."

The shareholder derivative lawsuit, brought in the name of the company by Oracle shareholder R. Andre Klein, asserts that the software company's board has deceived investors with false assertions about diversity and its misconduct has caused severe financial and reputational damage to Oracle—all to the detriment of stockholders.

"Oracle stands alone in the basement of just a handful of publicly‐traded companies that have earned the dubious distinction of having not a single Black person on its board," Klein's attorneys wrote. "In short, Oracle's culture and top ranks are permeated with a backwater attitude about diversity. And Oracle's problem is not just outdated views from a bygone era; statistics don't lie, and Oracle's board and workforce reveal one of the lowest prevalence of Black individuals and minorities in Silicon Valley." 

The complaint seeks the resignation of three current board members to be replaced by non-white members, specifically two Black members and one other minority. It also calls for the replacement of Ellison as chairman with a non-executive. Plaintiffs also want all director defendants to donate all their 2020 Oracle earnings to organizations promoting equality and the advancement of Black and minority individuals. Additionally, the suit demands that Oracle create a $700 million fund to hire and promote Black and minority team members, as well as create a mentorship program specifically for people of color. 

The lawsuit is the latest in several actions alleging systemic discrimination within Oracle. The lawsuit notes the two congressional inquiries into Oracle's lack of diversity, as well as a complaint brought by the U.S. Department of Labor that alleged the company owed women and minority workers some $400 million in wages. In April, San Mateo Superior Court Judge V. Raymond Swope certified a class action of roughly 4,000 Oracle employees who claim they are paid less than men for the same work.

Oracle did not immediately respond to a request for comment late Thursday evening.

Bottini & Bottini filed a similar lawsuit against Facebook Inc., as well. A shareholder derivative complaint filed in the Northern District of California on Thursday alleges that Facebook CEO Mark Zuckerberg "wants Blacks to be seen but not heard."

"In short, Facebook's approach to diversity has been characterized by tokenism: make a small gesture to satisfy appearances, but don't make any underlying substantial change," the complaint asserts. "The message at Facebook is set at the top—by Zuckerberg and the rest of the board of directors."

Facebook did not immediately respond to a request for comment Friday morning.

The suit follows a virtual walkout staged by Facebook employees in June. The protesters criticized the company's inaction on President Donald Trump's Facebook posts that they contend promoted violence, including one that said "when the looting starts, the shooting starts," in reference to the unrest in the wake of the killing of George Floyd.

Like the Oracle suit, the Facebook complaint asks the company to replace three board members with two Black individuals and one minority. It also seeks to require board members to return their 2020 Facebook earnings and create a $1 billion fund earmarked for hiring and promoting Black and minority workers.

Read the complaint:

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