Case 3:20-cv-08331-WHA Document 115 Filed 02/16/22 Page 1 of 15
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`IN RE PINTEREST DERIVATIVE
`LITIGATION
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`This Document Relates to:
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`ALL ACTIONS.
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`No. C 20-08331-WHA
`No. C 20-08438-WHA
`No. C 20-09390-WHA
`No. C 21-05385-WHA
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`(Consolidated)
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`ORDER RE MOTION FOR
`PRELIMINARY APPROVAL OF
`SETTLEMENT IN SHAREHOLDER
`DERIVATIVE SUIT
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`INTRODUCTION
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`Plaintiffs in this shareholder derivative suit move, unopposed, for preliminary approval
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`of a settlement. For the reasons that follow, preliminary approval of the settlement is
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`GRANTED.
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`STATEMENT
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`This order describes the facts as alleged in the consolidated amended complaint in some
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`detail as no prior order has done so. The lawsuit, brought by shareholders of Pinterest stock,
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`arises out of allegations of widespread race and sex discrimination at defendant Pinterest, Inc.
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`The catalyst for the suit came in large part from nonparties Ifeoma Ozoma and Aerica Shimizu
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`Banks. They were hired as the second and third members, respectively, of Pinterest’s public-
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`policy team. The complaint identifies both Ozoma and Banks as Black women (and Ozoma
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`Case 3:20-cv-08331-WHA Document 115 Filed 02/16/22 Page 2 of 15
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`also as Japanese). As alleged, both complained internally about the discrimination they
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`experienced as Black women while working for Pinterest. One such instance occurred just
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`after Pinterest rolled out a policy against a particular extremist organization. Afterward,
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`Pinterest employees’ identities and internal Slack conversations were leaked to a reactionary
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`website. Ozoma and Banks warned the company about the risk that political extremists might
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`dox employees. The company allegedly ignored Banks and Ozoma’s well-founded concerns.
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`Ultimately, the reactionary website, it’s alleged, released a video with Ozoma’s photo, address,
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`and phone number. The video also incorrectly blamed Ozoma for Pinterest’s stance on the
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`extremist group. The video’s comments section allegedly featured numerous racist comments
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`directed at her. The company allegedly ignored both Banks and Ozoma’s concerns. Rape and
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`death threats also followed. Other female employees were doxxed. When Ozoma asked
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`Pinterest about options for her protection, she allegedly received no response and was forced to
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`hire her own security. Ozoma filed her own lawsuit regarding discrimination and retaliation in
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`July 2019; Banks filed a similar suit regarding poor treatment and inequitable pay in January
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`2020. Both suits settled for unknown amounts (Consol. Amd. Compl. ¶¶ 95, 103, 113–118,
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`124–126, 130, 135, 152, 171, 225, 294).
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`Then, in June 2020, both Banks and Ozoma publicly criticized Pinterest for issuing a
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`public statement in support of the Black Lives Matter movement shortly after the murder of
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`George Floyd. Specifically, both then-employees publicly called the statement hypocritical
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`given their experiences and efforts to achieve equal pay and leveling (internal company scores
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`reflecting employees’ baseline experience, which determines one’s salary) (id. ¶¶ 8, 93, 154–
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`62).
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`Allegations also include claims that Pinterest underpaid Francoise Brougher, the
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`company’s first COO, and a Black woman. That is, it’s alleged that she was underpaid and
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`received less favorable backloaded equity grants as compared to her white male peer even
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`though Brougher allegedly grew revenues from $500 million to $1.1 billion in about two years,
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`among other accomplishments. After she complained, the complaint alleges, Pinterest’s co-
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`founder, president, and CEO Benjamin Silberman retaliated by firing her, but the board sat idly
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`Case 3:20-cv-08331-WHA Document 115 Filed 02/16/22 Page 3 of 15
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`by. Brougher sued in state court in August 2020 and the case quickly settled for $22.5 million.
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`Various other female employees, Black employees, and employees of color are named in the
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`consolidated amended complaint as confidential witnesses and describe allegations of
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`discrimination small and large (id. ¶¶ 1, 173–79, 184–89, 232, 242, 332).
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`Central to all allegations lies the contention that Silbermann permitted a toxic culture of
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`“yes-men” around him, while sidelining female employees and employees of color. Pinterest’s
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`board of directors allegedly knew of this reality but failed to act (id. ¶ 13).
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`In response to Banks and Ozoma’s public statements, on June 28, 2020, members of the
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`board formed a special committee to investigate and address claims of systemic racial and
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`gender discrimination at the company. Between June and December 2020, it conducted 350
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`interviews with then-current and past employees, among other steps (Br. 7).
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`Shareholder Stephen Bushansky filed the first of four actions ultimately consolidated
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`here, on November 25, 2020 (Bushansky v. Silbermann, No. 3:20-cv-08331-WHA). Next, on
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`November 30, 2020, Employees’ Retirement System of Rhode Island (ERSRI) filed suit
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`(ERSRI v. Silbermann, No. C 20-8438-WHA) (Dkt. No. 1, see 28).
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`Then, “in December 2020,” the Special Committee proposed corporate governance
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`changes, to which “Plaintiffs’ efforts contributed,” according to the stipulation of settlement
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`(Renne Decl. Exh. 1 §1.4).
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`As for the remaining consolidated suits, Sal Toronto, Trustee of the Elliemaria Toronto
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`ESA, filed on December 29, 2020 (Toronto v. Silberman, No. C 20-9390-WHA). Those three
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`cases were related and then consolidated. Plaintiffs filed the consolidated amended complaint
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`in February 2021. Defendants moved to dismiss, and plaintiffs opposed. Then, by stipulation,
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`a prior order herein stayed the suit on June 1, 2021, and referred the parties to Judge Joseph C.
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`Spero for settlement discussions. On July 14, 2021, Howard Petretta filed a separate
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`shareholder derivative suit (Petretta v. Silbermann, No. C 21-5385-WHA). A prior order
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`consolidated it with our previously-consolidated derivative suit in October 2021 (Dkt. Nos. 28,
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`39, 49, 54, 69, 73, 76, 82, 83, 85, 86; Consol. Amd. Compl. ¶¶ 135, 152).
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`Case 3:20-cv-08331-WHA Document 115 Filed 02/16/22 Page 4 of 15
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`The suit names as individual defendants Pinterest’s top executives and board members:
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`Silbermann, Evan Sharp, Jeffrey Jordan, Jeremy Levine, Gokul Rajaram, Fredric Reynolds,
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`Michelle Wilson, Leslie Kilgore, and Todd Morgenfeld. The complaint alleges that these
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`individual officers breached their fiduciary duties to the Company by deliberately ignoring or
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`approving actions that discriminated against employees of color and female employees.
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`Plaintiffs sue on behalf of themselves and derivatively on behalf of Pinterest and all
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`“current Pinterest Stockholders,” which the stipulation of settlement defines as anyone owning
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`Pinterest common stock as of the “date of the execution of this Stipulation,” i.e., November 23,
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`2021, “excluding the Individual Defendants, the current officers and directors of Pinterest,
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`members of their immediate families, and their legal representatives, heirs, successors, or
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`assigns, and any entity in which the Individual Defendants have or had a controlling interest”
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`(Renne Decl. Exh. § I(c)).
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`In sum, the complaint centers on the theory that the board, which itself lacked diversity,
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`knew about the discrimination and retaliation practices in part because a majority of the
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`directors approved Brougher’s compensation package, witnessed that she was not invited to
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`board meetings, and knew about her termination; plus, they failed to intervene to prevent such
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`conduct. Finally, the complaint alleges that the failure to accurately describe the board’s
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`governance procedures and Brougher’s termination in the company’s 2020 Proxy Statement
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`violated Section 14(a) of the Securities Exchange Act of 1934 (Consol. Amd. Compl ¶¶ 15, 86,
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`197–206, 239).
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`This order follows briefing, a supplemental filing, and oral argument.
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`ANALYSIS
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`Federal Rule of Civil Procedure 23.1 provides that a shareholder derivative action “shall
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`not be dismissed or compromised without the approval of the court.” Under Federal Rule of
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`Civil Procedure 23(e), a district court must decide if a proposed settlement is “fundamentally
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`fair, adequate, and reasonable.” In re Pacific Enters Sec. Litig., 47 F.3d 373, 377 (9th
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`Cir.1995) (cleaned up) (applying Rule 23(e) to shareholder-derivative settlements). Above all,
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`“[t]he principal factor to be considered in determining the fairness of a settlement concluding a
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`shareholders’ derivative action is the extent of the benefit to be derived from the proposed
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`settlement by the corporation, the real party in interest.” In re Apple Computer, Inc. Derivative
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`Litig., 2008 WL 4820784, at *2 (N.D. Cal. Nov. 5, 2008) (Judge Jeremy Fogel) (quoting
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`Shlensky v. Dorsey, 574 F.2d 131, 147 (3d Cir. 1978)). A district court may weigh a variety of
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`factors as the particular facts of a case demand. Some factors include: the amount offered in
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`settlement; the strength of plaintiff’s case; the stage of the proceedings; and the expense and
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`complexity of further litigation. See Linney v. Cellular Ak. P’ship, 151 F.3d 1234, 1242 (9th
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`Cir. 1998). Furthermore, our court of appeals favors arms-length negotiations. Rodriguez v.
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`West Publ’g Corp., 563 F.3d 948, 965 (9th Cir. 2009) (noting lack of “fraud, overreach, or
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`collusion”). The scope of releases factor into the fairness of a settlement, as do discussions of
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`attorney’s costs and fees. See In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 948
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`(9th Cir. 2011).
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`This proposed settlement measures up.
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`First, the settlement’s proposed “corporate therapeutics” would afford nonnegligible
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`benefits to the corporation. Mills v. Elec. Auto-Lite Co., 396 U.S. 375, 395–96 (1970).
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`“Settlements involving nonmonetary provisions merit careful scrutiny to ensure that these
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`provisions have actual value to the class.” In re Hewlett-Packard Co. S’holder Derivative
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`Litig., 716 F. App’x 603, 607 (9th Cir. 2017) (quoting Rule 23 Advisory Committee) (applying
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`notes on class action settlements to shareholder derivative settlements) (cleaned up).
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`Furthermore,
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`The vast majority of shareholder litigation settles for no monetary
`recovery to the shareholder class. Why? Because non-pecuniary
`relief nevertheless entitles plaintiffs’ counsel to recover their fees
`from the corporate defendant under the “corporate benefit” doctrine .
`. . Having struck this Faustian bargain, attorneys now churn a mass
`of filings and settlements, the ultimate result of which is
`overcompensation of attorneys (on both sides) and systematic under-
`compensation of the plaintiff class.
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`Sean J. Griffith, Correcting Corporate Benefit: How to Fix Shareholder Litigation by Shifting
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`the Doctrine on Fees, 56 B.C. L. Rev. 1, 2 (2015), https://lawdigitalcommons.bc.edu/bclr
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`/vol56/iss1/2.
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`Case 3:20-cv-08331-WHA Document 115 Filed 02/16/22 Page 6 of 15
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`Plaintiffs worked with Professor Lori Nishiura Mackenzie of the Stanford Graduate
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`School of Business and Professor Joanna L. Grossman of SMU Dedman School of Law to
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`“develop demands” (Br. at 16).
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`This order pauses to note that both sides submitted supplemental briefs, which agree that
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`the governance recommendations herein have not replicated those of the special committee
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`(Dkt. Nos. 106, 107). Plaintiffs contend that they worked closely with the board’s special
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`committee to make solely “additive” or brand-new recommendations, which bears out in the
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`documents submitted (Dkt. No. 106). Certain of the settlement recommendations have already
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`been implemented, e.g., hiring a Global Head of Inclusion and Diversity (see id. §§ II.3, II.8,
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`II.9, V.2, V.3). The Court has also reviewed the public notice of the special committee’s
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`recommendations, which, Pinterest states, were adopted on November 25, 2020 (Dkt. No. 107
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`¶ 1). The public recommendations permit this order to assess the added value that this
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`settlement would offer to Pinterest. With the exception of recommendations (some now
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`adopted) to hire full-time investigators, create an ombuds office to receive complaints,
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`outsource the “Pulse survey,” and mandate unconscious bias training, the special committee’s
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`recommendations appeared general, nonbinding, and timid. The recommendations did not
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`include a dedicated budget for diversity, equity, and inclusion (DEI) provisions. They did not
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`set specifics as to recommended goals, instead using terms like “enhance” and “establish
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`guidelines” without further specification (or by giving few broad examples). Plaintiffs’ chart
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`comparing the special committee’s recommendations with those proposed herein appears
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`accurate and reveals that many provisions are brand new and have expanded upon special
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`committee ideas (Dkt. No. 106-1).
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`The settlement provisions could represent meaningful changes to corporate governance if
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`actually funded and faithfully executed. In general, the agreement would make the DEI goals
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`into “business imperatives” and give the board of directors power to oversee DEI
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`accomplishments, improving chances for meaningful change (Br. at 16). Specific therapeutics
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`touted include:
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`Duration and funding: Notably, the changes would apply for “no less than five years”
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`from approval, with $50,000 of funding over “up to 10 years” (Renne Decl. Exh. 1 § I(1)).
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`See, e.g., In re NVIDIA Corp. Derivative Litig., 2008 WL 5382544, at *3 (N.D. Cal. Dec. 22,
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`2008) (Judge Saundra Brown Armstrong) (crediting a $15.8 million benefit). The agreement
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`does not, however, require actually spending any portion of the amount, nor does it address
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`reversion of unspent portions of the $50 million. This makes it a weak therapeutic.
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`Release of non-disclosure agreements: The agreement includes a commitment not to
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`enforce non-disclosure agreements (NDAs), “for those individuals who made claims of race or
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`gender discrimination,” “so long as they only discuss the underlying facts and circumstances of
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`incidents and reporting process” (id. § IV(1)). In the settlement’s favor, the underlying facts
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`and circumstances are the most critical component of a person’s experience. Weighing against
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`it, the agreement does not state how many have been required to sign NDAs beyond those
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`noted in the complaint, and thus omits the scale of the provision’s effect. Importantly, our
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`agreement could have, but did not, require direct notice to employees who signed NDAs that
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`they may speak freely about their experiences. This possibly nulls the benefit of an agreement
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`not to enforce the NDAs, since it requires someone to assume the risk believing that legal
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`consequences would follow. This is a disappointment to the Court, which now urges the
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`parties to reconsider, but does not require it.
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`Furthermore, the relief is retrospective only. Plaintiffs’ counsel, however, represented at
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`the hearing that Pinterest separately agreed to stop requiring NDAs in such situations. Since
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`the special committee recommendations did not so require, a prior order solicited a sworn
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`statement from Pinterest on this score. Pinterest has provided that sworn statement
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`establishing that what counsel said is true, that Pinterest has decided prospectively not to
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`require any NDAs in harassment or discrimination suits and will not change its policy back to
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`requiring the same so long as it remains consistent with the law (Dkt. 114).
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`Board oversight: A board member would serve with the CEO as co-sponsor of DEI
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`work (cooperating with RHR International), and the board or a committee will be involved in
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`“overseeing and conducting due diligence” for any executive leadership team member being
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`fired. Additionally, DEI measurables would be internally audited annually and Pinterest would
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`submit results to the board annually as well, making the agreement the “first settlement of its
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`kind to make DEI an audited function.” This would elevate DEI to the level of priority usually
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`occupied by financials, which could help to ensure that DEI changes do not fall behind the
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`radiator. On the other hand, executive-level employees would mostly benefit from this
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`provision to increase oversight over terminations. The board remains quite removed from the
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`day-to-day experience of Pinterest employees. On balance, acknowledging DEI as a risk factor
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`to the corporation favors settlement (Br. at 7; Renne Decl. Exh. 1 § II).
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`Pay equity and transparency: Pinterest would bi-annually audit pay equity (across sex
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`and race categories); the organization Secretariat Economists would consult on pay equity;
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`employees would have access to a company organization chart, “job-level information for
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`employees throughout the company,” and access to compensation information for their family
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`of jobs (id. §§ XIII(1–9)). If employees believed their pay lagged, they could more readily
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`seek equitable compensation. If taken seriously, consultants could bring sunshine to this issue.
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`Executive accountability for DEI culture and business goals: Each executive leader
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`at Pinterest would develop “DEI” goals with the chief people officer and global head of
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`inclusion and diversity (the latter already hired). Performance evaluations for managers would
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`weigh their progress in creating an inclusive workplace culture. If executed, these provisions
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`could help to make Pinterest’s DEI goals matter to each aspect of its business and prevent
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`discrimination both subtle and explicit. This order recommends, however, that the company
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`set its benchmarks for inclusivity and equity as reflected in the experiences of those affected by
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`the allegations in our complaint, e.g. among female employees as well as employees of color
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`(among others, including nonbinary, and transgender employees). Pinterest’s perceived
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`inclusivity and equity for these employees is more valuable to solving the specific problems at
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`issue in this suit. Employee Pulse surveys should permit (privately) sorting responses by these
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`demographic groups, so long as the initial opportunity to provide demographic information
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`remains voluntary (id. § VI(3)).
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`“Inclusive Product Program”: The team managing this project would work at
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`“identifying a pipeline of project opportunities for using Pinterest to promote diversity and
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`inclusion” (Br. 8). Additionally, “Two paid internships or apprenticeships will be offered
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`every year to individuals from backgrounds traditionally underrepresented in technology;
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`recruitment for these positions will take place at, for example, Historically Black Colleges and
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`Universities and Hispanic-Serving Institutions” (id. at 9). Defendants aver that this recruitment
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`has already begun to some extent. This recommendation did little to change a preexisting
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`recommendation by the special committee, and funding could strengthen its staying power —
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`if Pinterest actually spends the money (see Renne Decl. Appendix C; Renne Decl. Exh. 1 §§4-
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`6, 7–8, 12–13).
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`Equity in hiring: Pinterest would standardize interview evaluations to avoid inequitable
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`hiring practices. The agreement would require that the company look to hire from a “diverse
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`slate” of applicants, with limited exceptions. If a business unit fails regularly to interview a
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`diverse slate of candidates, then the “head of that organization” would be required to meet with
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`the chief people and chief diversity officers to amp up this recruiting (Renne Decl. Exh. 1 §
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`XIII(6)).
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`Improve employee safety: Pinterest would impose policies to prohibit doxxing. If
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`doxxing occurred, the company would provide affected employees with online “presence
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`curation services” and the services of a third-party vendor to help remove the abusive content
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`“where feasible” (id. § X(1)).
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`These changes appear potentially meaningful and support settlement. Particularly
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`important provisions include the efforts to make pay transparent by “family” to employees,
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`forgo enforcing past NDAs, and build in board oversight of DEI efforts.
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`Second, the strength of plaintiffs’ case, and third, the risk, expense, and complexity of the
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`case, favor settlement. Counsel for plaintiffs conclude that prevailing would prove a large
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`task. A selection of the hurdles follow.
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`Defendants’ motion to dismiss remains pending. It argues in part that plaintiffs lacked
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`standing for certain acts. At a motion to dismiss, plaintiffs would be required to defeat
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`Case 3:20-cv-08331-WHA Document 115 Filed 02/16/22 Page 10 of 15
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`“demand futility,” i.e., that the board would not have acted on the issues raised in the suit if
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`plaintiffs had raised those issues to it. Moreover, the complaint has pleaded a Caremark claim,
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`i.e., that the board members “failed to act” to prevent discriminatory conduct, but not that the
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`board directly discriminated. See In re Caremark Int’l. Inc. Deriv. Litig., 698 A.2d 959, 967
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`(Del. Ch. 1996). A theory of disregard or willful ignorance is (for obvious reasons) more
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`challenging to win than those involving direct misconduct. According to the settling parties,
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`no Caremark claim has survived a motion to dismiss when premised on race discrimination
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`under Title VII. Additionally, defendants challenged standing as to the employment and pay
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`decisions regarding Brougher, as those events preceded plaintiffs’ tenure as shareholders
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`(Renne Decl. Exh. 1 at 17, 19).
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`In addition, the “business judgment rule” would provide defendants with a presumption,
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`which plaintiffs would be required to overcome, that board members act in the company’s best
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`interest. Towers v. Iger, 912 F.3d 523, 528 (9th Cir. 2018) (Dkt. No. 69 at 5). In light of the
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`presumption, plaintiffs are required to have pleaded with particularity that at least half of the
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`board could not have acted with “disinterest” in the challenged practices. Id. at 529.
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`Defendants argue that no red flags gave board members a chance to act at the time.
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`Furthermore, defendants argued, “Pinterest’s Certificate of Incorporation exculpates
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`directors of liability for all breaches but of the duty of loyalty,” thus requiring plaintiffs to
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`show scienter as to each individual defendant, in order to overcome a presumption that each
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`officer was “faithful” to her fiduciary duty (Dkt. No. 69 at 7). See also In re Facebook, Inc.
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`S’holder Derivative Priv. Litig., 367 F. Supp. 3d 1108, 1123 (N.D. Cal. 2019) (Judge Haywood
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`S. Gilliam, Jr.). This is a steep burden.
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`Finally, plaintiffs considered that Pinterest’s board may choose to establish a “Special
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`Litigation Committee” empowered ultimately to recommend against pursuing litigation. In re
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`Pac. Enterprises Sec. Litig., 47 F.3d 373, 378 (9th Cir. 1995) (confirming this possibility
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`weighs in favor of settlement). The relative weakness of plaintiffs’ case, complexity, and
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`likelihood that extensive and costly litigation poses a substantial risk to plaintiffs all favor
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`settlement.
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`Case 3:20-cv-08331-WHA Document 115 Filed 02/16/22 Page 11 of 15
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`Fourth, the extent of discovery and the stage of the proceedings are preliminary.
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`Plaintiffs’ counsel inspected records that Pinterest produced in response to “books-and-records
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`inspections demands” (Renne Decl. Exh. 1 § III). Only one motion has been filed and remains
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`partially briefed. Vigorous discovery might well develop strong facts warranting strong relief.
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`Counsel are arguably giving up too soon. This weighs against settlement.
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`Fifth, the experience and views of counsel support the settlement. Plaintiffs are
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`represented by various experienced counsel, particularly Louise Renne (Interim Liaison
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`Counsel), who ranks as highly experienced. The Court places great faith in the word of
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`Attorney Renne and trusts her judgment. But for her strong endorsement, the Court might
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`have qualms about the true efficacy of this deal. Furthermore, counsel say all plaintiffs support
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`the settlement.
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`Sixth, no governmental entity participated in the suit, so this factor is neutral.
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`Seventh, the settlement lacks signs of a sweetheart deal. Judge Spero’s role presiding
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`over two full-day negotiations and ultimately proposing a mediator’s proposal offers an aura of
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`fair resolution. The parties spent months negotiating in between. Nonetheless, mediation deals
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`in the art of the possible. It does not guarantee a just outcome.
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`Eighth, the scope of release favors approval. The settlement agrees to release all claims,
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`including those not known of by the shareholders and which would affect their decision to
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`settle, in effect waiving their rights under California Civil Code Section 1542. To the credit of
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`the stipulation, the release does not include any claims arising out of actions taken after the
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`date of the stipulation, November 23, 2021 (n. 3).
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`Ninth, the proposed attorney’s fees rank as “disproportionate.” In re Bluetooth, 654 F.3d
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`at 947. “A ‘multiplier’ is a number, such as 1.5 or 2, by which the base lodestar figure is
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`multiplied in order to increase (or decrease) the award of attorneys’ fees on the basis of such
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`factors as the risk involved and the length of the proceedings.” Staton v. Boeing Co., 327 F.3d
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`938, 968 (9th Cir. 2003). “It would be unusual not to apply a risk multiplier when (1) the
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`attorneys reasonably take a case with the expectation that they will receive a risk enhancement
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`if they prevail, (2) their hourly rates do not reflect that risk, and (3) there is evidence that the
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`Case 3:20-cv-08331-WHA Document 115 Filed 02/16/22 Page 12 of 15
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`case was indeed risky.” Gutierrez v. Wells Fargo Bank, N.A., 2015 WL 2438274, at *7 (N.D.
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`Cal. May 21, 2015). Plaintiffs’ counsel, Cohen Milstein Sellers & Toll PLLC, Renne Public
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`Law Group, Weisslaw LLP, Bottini & Bottini, Inc., and Robbins LLP propose to notify
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`shareholders that they anticipate requesting from the Court two times their lodestar plus
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`reasonable expenses incurred in the course of litigation, not to exceed a total of $5,380,000.
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`All this, it is claimed, is warranted by the series of corporate rehabilitation measures that
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`counsel “accomplished” for the company, though the board’s special committee had already
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`completed its (extensive) work before all these actions were filed. For instance, the committee
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`interviewed 350 current and former employees. Indeed, the special committee made
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`recommendations, unanimously adopted, months before the filing of the consolidated amended
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`complaint and prior to the filing of two out of the four lawsuits consolidated here. In their
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`favor, the comparison of the special committee’s recommendations versus those included
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`herein reveals that the agreement’s terms add to the special committee’s recommendations.
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`The agreement also would provide novel and potentially concrete changes. The record before
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`us does not support plaintiffs’ contention that they contributed to the special committee’s
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`recommendations, however.
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`Tenth, the parties appear to have avoided any clear-sailing agreement. Nor does the
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`proposal yet involve enhancement awards for plaintiffs. Nevertheless, with respect to a
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`percentage cross check, “[s]pecial circumstances,” namely the special committee’s
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`investigation and recommendations, means that this suit is likely to warrant a small multiplier
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`if any. In re Bluetooth, 654 F.3d at 942. The timing of any payment will be decided at final
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`approval (cf. Renne Decl. Exh. 1 § 3.3).
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`Eleventh, the sufficiency of the notice to shareholders seems reasonable. It details the
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`settlement, the governance changes, and the events that precipitated them, including the work
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`of the special committee. The summary notice also appears, while pared-down, adequate. The
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`method of distribution and requirements by those who would object, however, fall short.
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`Preliminarily, while plaintiffs’ brief requests approval of the proposed process for notifying
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`shareholders notice, the language proposing the process appears in the proposed order and
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`Case 3:20-cv-08331-WHA Document 115 Filed 02/16/22 Page 13 of 15
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`proposed final judgment — not the stipulation. The former offers: “Pinterest shall cause the
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`Notice and Stipulation to be posted on its investor relations website until the Judgment
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`becomes Final and shall publish the Summary Notice in Investor’s Business Daily”(id. § 2.1–
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`2.2; Dkt. No. 99-2 Exh. D ¶ 5, Exh. E ¶ 3).
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`The best practicable notice to shareholders would also include first-class mail and e-mail
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`notice to shareholders. If physical mail is returned undeliverable, the sender will perform a
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`“skip trace” to identify forwarding address(es). The exterior of the envelope for the mailing
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`notice shall state “Important Shareholder Derivative Action Settlement Notice” and shall state
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`that it is “From the United States District Court, Northern District of California, Honorable
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`William Alsup, 450 Golden Gate Avenue, San Francisco, CA 94102,” with the return address
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`directing service to the sender. (Please note the absence of middle initial.) The statement shall
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`be printed somewhere on the envelope such that the Court’s mailing address could not possibly
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`be mistaken for the shareholder’s mailing address. This issue has recently arisen in other cases
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`and resulted in the Court receiving notices in error. The sender must take care to avoid this.
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`As for objectors, “The proposed process to object to the settlement agreement or to the
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`attorney’s fee or incentive awards requires shareholders to both file the objection and
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`supporting documentation with the Court