Summary: Apple is accused of breaching its fiduciary duty, gross mismanagement, corporate waste, and a breach of the duty of honest services in a new derivative shareholder complaint filed this week.
AppleInsider reports that a derivative shareholder complaint has been filed by Plaintiff R. Andre Klein this week in the United States District Court for the Northern District of California against Apple. The suit alleges senior directors and officers at Apple committed a “breach of fiduciary duty, gross mismanagement, corporate waste, and breach of the duty of honest services.” The suit names the late Steve Jobs and current CEO Tim Cook in its list of defendants.
The heart of the suit is the allegation that the defendants forced the company to violate antitrust laws, stifled worker wages, and issued false and misleading proxy statements. This led to Apple being harmed due to being forced into a settlement with the Department of Justice in 2010. Apple is also involved in a class action suit filed by a group of its employees. Obviously, this has hurt the company’s reputation, and has hindered its innovation.
Therefore, because of these actions, Apple was forced to spend a fortune on “expenditures related to ‘years of lost opportunities to hire more qualified employees that were employed at other companies’” as well as costs associated with defending itself and rebuilding its reputation.
The complaint echoes the pending class action suit, in which employees allege Apple endorsed anti-solicitation agreements aimed to stop worker poaching between Adobe, Google, and Intel. Judge Lucy Koh identified Jobs as a “central figure in the alleged conspiracy.” Judge Koh based this statement on witness depositions and email correspondence between Jobs, Google’s Sergey Brin and Eric Schmidt, and former Palm CEO Edward Colligan. Colligan alleges Palm was threatened with a patent suit if Palm “poached an Apple employee.”
Other named defendants include William Campbell, former Chairman of Apple’s board; Fred Anderson, former CFO; and Mickey Drexler, Art Levinson, Bob Iger, and Andrew Jung, former board members. Some 30 “doe defendants” are also cited, however, their identities will only be revealed if the suit enters the discovery phase.
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