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Diversity suit filed against The Gap dismissed

The Gap

A federal district court has dismissed a diversity lawsuit filed against The Gap Inc., citing the company’s bylaws, which designates the Delaware Court of Chancery as the exclusive forum for claims.

Plaintiff Noelle Lee charged in the derivative lawsuit, which was filed in U.S. District Court in San Francisco in September, that the San Francisco-based clothing retailer has failed to create any “true racial or ethnic diversity” on its board or in its top leadership roles despite its written proclamations to the contrary, according to the complaint in Noelle Lee v. Robert J. Fisher et al. Mr. Fisher is the company’s chairman.

The complaint charged the company with breach of fiduciary duty, aiding and abetting breach of fiduciary duty, abuse of control, unjust enrichment and violation of securities law and regulation.

Tuesday’s ruling was first reported by the D&O Diary.

The court held the company’s exclusive forum provision is valid. “Plaintiff does not point to any statute or judicial decision that clearly states that enforcing the forum selection clause would contravene a strong public policy,” said the ruling, in dismissing the case.

Plaintiff attorney Frank Bottini, of Bottini & Bottini Inc. in La Jolla, California, said in an email he plans to appeal. The Gap’s attorneys did not respond to a request for comment.

Other companies have been charged in similar diversity suits, including Facebook Inc. Another San Francisco judge dismissed the Facebook case, Natalie Ocegueda v. Mark Zuckerberg, et al., last month. The judge cited the company’s Delaware forum-selection clause as among her reasons for dismissing the case.

Under A.B. 979, which was signed into law by Gov. Gavin Newsom last year, publicly traded companies in the state are to have at least one minority director by Dec. 31.