Starbucks officers and directors face lawsuit over corporate diversity goals

Employers should be on notice that broad diversity, equity, and inclusion (DEI) policies—such as many large companies have designed and/or put in place—can expose them to legal challenges. In August 2022, conservative nonprofit the National Center for Public Policy Research (NCPPR) filed suit against Starbucks and its officers and directors, alleging they are violating their fiduciary duties by creating DEI policies that violate Title VII of the Civil Rights Act of 1964, Section 1981, and various local and state equal employment opportunity (EEO) laws in the interest of receiving “social credit.”

NCPPR challenges companies’ DEI programs
By means of shareholder proposals and demand letters, NCPPR has become well-known for using its status as a stockholder in major American companies to challenge corporate DEI goals it sees as unlawful. Its shareholder proposals typically request a company’s board commission an audit analyzing how the policy affects civil rights/nondiscrimination and the company’s business. In 2022, at least 12 companies put NCPPR’s proposals to a vote, including Walmart, Twitter, and AT&T. It has also sent letters to companies demanding they retract their DEI policies and threatening legal action if they don’t comply.