Cisco Systems, Inc is an American company that engages in the design, development, manufacture, and sale of networking products and services for communications and information technology. The company sells software for camera surveillance systems tied into networks for private and government customers. Cisco has had its share of successes and failures in this arena. Claims that Cisco knowingly sold software with vulnerabilities that posed potential threats for system hacking resulted in numerous lawsuits filed by government agencies. They’ve also been sued for wage and hour violations confirmed through Department of Labor officials. Cisco has also been investigated by the Securities Exchange Commission for allegations of misrepresentations that violated the False Claims Act. Cisco has acknowledged wrongdoing in some of the cases but denied responsibilities in others. The company settled some cases to avoid further legal expenses without admitting wrongdoing. Here are the ten biggest Cisco Systems lawsuits of all time.
10. New York sues for the cut of settlement from Cisco Settlement amount: $1.3 million
The New York Law Journal reports that the State of New York filed an action to receive $1.3 million in an $8.6 million settlement with Cisco Systems Inc in its prolific whistleblower case. The lawsuit was filed in 2019 in the Western District of New York Court alleging that the State of New York purchased software that was vulnerable to digital attacks from Cisco. Attorney General for New York Letitia James joined with the 19 other state AGs to recoup their damages for Cisco’s willful deception that put all of the governments at risk of attack. New York was awarded damages of $1.3 million as compensation.
9. Cisco sued for discrimination in the workplace Settlement amount: $4.5 million
Bloomberg Law confirms that Cisco Systems Inc. was accused of paying white and male employees more for their work than women and minority employees in similar jobs. Allegations go back to 2011, according to the Labor Department. The Department of Labor’s Office of Federal Contract Compliance Programs investigated complaints filed against Cisco Systems for bias in compensation based on gender and race. The investigators discovered information supporting the claims with incidences of up to 1,505 current and former employees of Cisco who were female, African American, and Hispanic, with compensation that was not on par with that of white males in similar jobs. Victims of the unfair compensation worked at the San Jose California location of Cisco. The wage inequities resulted in violations of equal employment opportunity laws and the provision of fair wages. Fair compensation is an ongoing problem in the workplace, and courts are obliged to weigh all the evidence and ensure that all workers are fairly compensated. An audit revealed that Cisco needs to make adjustments to its compensation scale to ensure fairness and equality among all employees without regard to gender or race. An investigation into 23 Cisco locations throughout the country revealed that San Jose, California was the only location that was out of compliance. The issue was not systemic, but rather isolated to a single location. The lawsuit settled in 2020 with Cisco Systems, Inc agreeing to pay $2 million for lost wages and interest to the more than 1,500 current and former workers. Additionally, it will make a minimum of $2.75 million in salary adjustments between 2020 and 2025.
8. Cisco sued for consumer protection-related offenses Settlement amount: $6 million
Violation Tracker confirmed that Cisco Systems Inc was accused of committing consumer protection-related offenses under the False Claims Act. The company has a history of selling surveillance equipment and software with known vulnerabilities, exposing networks to the potential for hacking by cybercriminals. A similar case involved substantiated claims by the GSA earlier. A civil suit was filed against Cisco by Multistate Attorneys General for the privacy violation for knowingly selling governments security camera software that had flaws that would allow outsiders to gain unauthorized access. Cisco agreed to pay $6 million in penalties to settle the lawsuit in 2019.
7. Cisco sued for wage and hour violations Settlement amount: $6.7 million
Violation Tracker reports that Cisco Systems Inc was sued for allegations of misclassifying some of its workers resulting in wage and hour violations. A private lawsuit was filed in the Superior Court of the State of California, County of Orange, in a civil action against the company in the Kathleen Fulton Vs. Cisco Systems Inc case. Kathleen Fulton claimed that Cisco caused financial damages to her by misclassifying her position, negatively affecting her rate of pay. Cisco Systems Inc. agreed to a settlement amount of $6,700,000 to resolve the private case that was settled in 2009. This is one of many lawsuits filed against Cisco for unfair or inequitable pay for women and minorities. Not all Cisco locations are guilty of committing these violations, suggesting that it is a problem that exists among decision-makers at local individual sites with more training needed to apprise them of the law and fair labor practices.
6. Cisco sued for video surveillance software vulnerability Settlement amount: $8.6 million
CRN News reports that Cisco Systems was accused of selling video security software that had known security vulnerabilities. Sales were made to US state and federal governments. The lawsuit was filed under the False Claims Act in 2011, alleging the Cisco Video Surveillance Manager was below Cisco’s cybersecurity standards, yet the company knowingly sold it to consumers. A Denmark-based Cisco partner who worked for NetDesign disclosed the information to the government about the issues related to the software. NetDesign is a private firm that builds and manages security solutions. While working on a project with Danish police, the whistleblower learned of the vulnerability that could allow hackers to gain access to user networks. and shared the information through his legal counsel. Cisco continued to distribute the outdated technology after learning of the issues but did not use it to protect their systems. They acknowledged the indiscretion and agreed to issue a partial refund to some states and the United States Federal government in a settlement of $8.6 million. The US federal government will receive $2.6 million and $6 million will be distributed among fifteen states, Washington DC, and some cities and counties within those states.
5. Whistleblower lawsuit for increased pay Settlement amount: $9.1 million
Top Class Action Lawsuits confirms that two whistleblowers filed a lawsuit arguing that their payout from a $48 million settlement should be increased. The suit arose from a previous lawsuit against Cisco Systems Inc, regarding misleading information provided to contractors for the government, causing defects in pricing and kickbacks in exchange for federal contracts, violating the False Claims Act. The whistleblowers argued that the $8.1 million rewards for putting their careers and reputations on the line were valued higher than the award granted and that they are entitled to a portion between 15 to 25 percent of the total settlement because their claims and the claims of the government overlapped significantly. The lawsuit is significant as it puts the statutory share rule to the test. Attorneys for the whistleblowers justify a 19 percent share of the settlement awarded from the False Claims settlement justified by a decision made earlier by a Missouri federal judge. Whistleblowers are usually granted substantial awards because they are often current employees of companies committing violations. They witness fraudulent activities and must choose whether to report them or remain silent. Some must leave their positions to participate in legal actions. They face the probability of backlash by coming forward and putting their financial security on the line to achieve justice for the plaintiffs. Protections within the legal system are set in place to protect whistleblowers, but they don’t always achieve the desired outcomes.
4. Cisco lawsuit for SEC violations Settlement amount: $20 million
The SEC confirmed that Scientific-Atlanta, Inc, a subsidiary company of Cisco Systems Inc, was accused of aiding and abetting Adelphia Communications Corporation in violations of federal securities laws by committing accounting fraud and creating deficiencies in reporting, books and records, and internal controls. The Securities and Exchange Commission investigated suspicions and claims and concluded that the allegations were supported. Cisco Systems, Inc and Scientific-Atlanta, Inc. settled the claim in 2006 for $20 million in SEC penalties.
3. Cisco settled False Claims Allegations in 2010 Settlement amount: $48 million
Phillips & Cohen report that Cisco Systems was accused of violating the False Claims Act by making statements of misrepresentation to the General Services Administration and some other federal agencies. Westcon Group North America was also named in the lawsuit filed in 2010 alleging that the two companies overcharged the government by providing fraudulent information to contract officers in the General Services Administration resulting in improper pricing of Cisco products purchased by the GSA and other federal agencies. The GSA Inspector General claimed the misrepresentation and practices of overcharging are violations of the False Claims Act that cause waste of taxpayer dollars. Untruthful and incomplete information provided to contractors resulted in a claim against Cisco. Cisco and Westcon Group North America agreed to pay a settlement of $48 million to resolve the claims of misrepresentation and bring the legal action to an end. The settlement agreement intends to reimburse the government for the differences in a fair price and what resulted in overcharges.
2. Cisco Shareholders Lawsuit Settlement amount:$91.75 million
Cisco Systems was accused of insider trading and making misleading statements about its performance to attract investors to purchase stock in the company. Shareholders who purchased Cisco common stock between November 10, 1999, and February 6, 2001, filed a class-action lawsuit in the United States District Court for the Northern District of California in 2001. Cisco denied the allegations that they omitted statements of material fact, and issued misleading statements. The action further claims Cisco participated in insider trading, asserting the claims were without merit. Investigations into the claims commenced by discovering evidence to support the claims made by the plaintiffs. Progress in resolving the case was slow. Cisco Systems incurred significant legal expenses in its attempt to defend its position and prove that the claims were false. Little progress was made and the legal expenses continued to mount for Cisco Systems. The lawsuit continued until 2006, at which time, Cisco agreed to a settlement of $91.75 million to prevent the further expense of litigation. The settlement was made to return value to its shareholders. Cisco continues to maintain its innocence regarding the claims, explaining that it’s in the best interest of the Shareholders and Cisco to resolve the class-action lawsuit and return to normal business.
1. Cisco sued over patent infringement Settlement amount: $1.9 billion
Cisco was accused of patent infringement by a Virginia company called Centripetal Networks Inc. The lawsuit was filed in the US District Court, Eastern District of Virginia. The lawsuit alleged that Cisco infringed on five patents secured by the Herndon, Virginia company. Cisco responded to the allegations contending that the innovations it used suspected of violating patent laws were used many years before Centripetal Networks secured its patent. Cisco provided no other reasonable defense to the use of the protected intellectual properties. The judge ruled that Cisco’s documentation verifying its use of the properties in question proved its guilt. He ruled that Cisco infringed on four of the five patents. Cisco was ordered to pay $755.8 million in damages suffered by Centripetal times 2.5 for what the judge called “willful and egregious” conduct and an award of $1.89 billion for a total of $1.9 billion. Cisco planned to appeal the decision.