Judge Tosses Out California Law Mandating Diversity Quotas on Boards

Los Angeles Superior Court Judge Terry Green tossed out California’s corporate diversity law to require publicly held corporations based in the state to include racial minorities and members of the LGBTQ community on their executive boards, ruling it “unconstitutional.”

The judge went so far as to suggest the law was so obviously unconstitutional, it didn’t even merit a trial.

Judicial Watch filed the lawsuit in Los Angeles Superior Court in October 2020 following the passage of Assembly Bill 979, with Gov. Gavin Newsom signing it into law. “Gender quotas and now new quotas for numerous other groups for corporate boards are slaps in the face to the core American value of equal protection under the law,” Judicial Watch President Tom Fitton said, the Globe reported at the time.

This was California passing another “first” with the board diversity quota, yet it followed an equally legally dubious 2018 law mandating female directors on all boards of the state’s publicly held corporations. That law was also legally challenged by Judicial Watch, which the Globe predicted in 2019.

The Globe reported in 2019:

“In 2018, the California Legislature passed a bill to require large corporations with base operations in California to put more female directors on their boards. Democrat Senators Hannah Beth Jackson’s and Toni Atkins’ gender quota bill is illegal, unconstitutional, and most definitely a precursor of negative outcomes, as recent history shows.

Gov. Jerry Brown signed Senate Bill 826 despite legal warnings that forcing publicly traded companies based in the state, and with operations located in other states, to have at least one woman on their boards by the end of 2019 and, on boards of five or more directors, and two or three women by the end of 2021 was unconstitutional.

Ironically, Brown practically invited legal challenges in a signing memo saying, “There have been numerous objections to this bill and serious legal concerns have been raised.”

Also ironically, the 04/23/18- Senate Judiciary Committee analysis produced eight pages of existing affirmative action law already benefitting women in the California workplace. Equally ironic is how many bills Sen. Atkins and her Democrat Caucus members have passed attempting to blur the differences between women and men.

The Globe also asked the obvious question: If gender is “neutral,” why mandate more women on boards?

According to AB 979 the corporate diversity law would require California based companies with fewer than 4 board seats to have at least one minority held seat, while companies with 4 to 8 board members needing to have at least two, the Globe reported. Any boards larger than eight members will need to have three or more minority board members. Under the bill, minorities will include those identifying as African American, Hispanic,  Asian American, Pacific Islander, Native American, Native Hawaiian or Alaska Native, gay, lesbian, bisexual, and transgender.

Judicial Watch argued the law violated the state Constitution’s equal protection clause by establishing explicit set-asides based on racial, ethnic or sexual preference, the Wall Street Journal reported. “The law also flouts the U.S. Supreme Court’s Bakke precedent (1978), which struck down strict racial quotas in college admissions.”

“State judge Terry Green didn’t explain his reasoning for enjoining the law, perhaps because it so clearly violates equal protection,” the WSJ editorial board said. “Many colleges discreetly use racial preferences in admissions because quotas are prohibited, and this fall the Supreme Court will consider whether Harvard’s use of race discriminates against Asian-Americans.”

The timing of the Friday ruling is important because the bill stated that if companies were not compliant by the end of 2022, they would face fines between $100,000 and $300,000 for each offense.

Despite the 2018 unconstitutional bills and ongoing legal challenges, another similar bill passed through the Legislature and was signed into law in 2019 by Gov. Newsom also mandating females on local boards and commissions.

AB 931 by Assemblywoman Tasha Boerner Horvath (D-Encinitas), requires that, by 2030, all large California cities must have women serving in at least 50 percent of their appointed, non-salaried local board and commission seats overall, and at least a specified numbers of seats approaching 50 percent on each individual appointed, non-salaried board and commission.