State Law With Quotas for Corporate Boards Ruled Unconstitutional

We the People 7

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LOS ANGELES (CNS) - A legal organization is hailing a judge's ruling that a California law requiring the boards of public corporations to include a member from an ``underrepresented community'' is unconstitutional.

  Friday's ruling by a Los Angeles Superior Court judge invalidates AB 979, passed in 2020 and signed by Gov. Gavin Newsom in 2021. It required corporate boards of publicly traded companies with a main executive office in California to have a member from an underrepresented community, including LGBT, Black, Latino, Asian, Native American or Pacific Islander. The law was challenged by Judicial Watch, which said it violated the state's constitutional equal protection clause.

  ``This historic California court decision declared unconstitutional one of the most blatant and significant attacks in the modern era on constitutional prohibitions against discrimination,'' Judicial Watch President Tom Fitton said Friday ``In its ruling today, the court upheld the core American value of equal protection under the law. Judicial Watch's taxpayer clients are heroes for standing up for civil rights against the left's pernicious efforts to undo anti-discrimination protections.''

  The California Secretary of State's Office did not immediately comment on the ruling, but state officials had argued in court papers that AB 979 didn't ``discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.''

  In signing the bill last year, Newsom cited the importance of increasing diversity on the boards of powerful corporations.  ``When we talk about racial justice, we talk about empowerment, we talk about power, and we need to talk about seats at the table,'' the governor said.

  Judicial Watch is also suing over a similar California law requiring companies to increase the number of their female board members. Passed in 2018, SB 826 applies to publicly held corporations with principal executive offices located in California and required them to have at least one female director on the board by the close of 2019.

  Additionally, by the end of 2021, some boards were required to have additional female directors based on the size of the board.

Judicial Watch filed the taxpayer lawsuit in August 2019 against then- Secretary of State Alex Padilla on behalf of plaintiffs Robin Crest, Earl De Vries and Judy De Vries. They argue that the law violates the California Constitution's equal protection clause and asked the court to permanently enjoin any expenditure of taxpayer funds to implement the quotas.

 They further argue that laws already exist banning gender discrimination and if they are not being enforced, it is up to the Legislature to do so.

  In their court papers, lawyers for the Attorney General's Office argue that the plaintiffs cannot show that any illegal or wasteful expenditures of taxpayer money has occurred in the implementation of the law's requirements. They also maintain that the law addresses longstanding discrimination against women in the ``secretive process of corporate board director selection on publicly held corporations in California and attains the benefits of gender diversity for the public and the economy.''

  When he signed SB 826 into law in 2018, then-Gov. Jerry Brown noted that there have been ``numerous objections to this bill and serious legal concerns that have been raised,'' adding that he would not ``minimize the potential flaws that indeed may prove fatal to its ultimate implementation.''

  Copyright 2022, City News Service, Inc.

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