On Monday, the legal group Judicial Watch announced that they filed a lawsuit in Los Angeles Superior Court to halt a new state law to require a mandatory number of racial minorities on company boards.
The Judicial Watch lawsuit against AB 979
In a filing made last week, Judicial Watch said that Assembly Bill 979, recently signed into law by Gov. Gavin Newsom, which will require a minimum number of minorities to be on corporate boards, is unconstitutional. According to the lawsuit, Judicial Watch says that AB 979 is unconstitutional because the racial quotas “wouldn’t achieve a compelling governmental interest that is more narrowly defined than the existence of general societal discrimination.”
Judicial Watch President Tom Fitton released a statement on Monday clarifying the groups position.
“California’s government has a penchant for quotas that are brazenly unconstitutional,” Fitton said. “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.”
The group also noted that the law endangers the Equal Protection clause, and the new law is highly suspect because of a governmental analysis of the bill noting race and ethnicity differences.
“The legislation’s requirement that certain corporations appoint a specific number of directors based upon race, ethnicity, sexual preference, and transgender status is immediately suspect and presumptively invalid and triggers strict scrutiny review by the court,” noted the lawsuit.
Supporters of the new law, who expect the bill to slowly take effect in the next few years, said that the lawsuit is an attack on people of other races and that those against the new law don’t want racial justice or diversity in companies in California.
“The lawsuit very clearly shows that some people don’t care about hearing other voices or getting input from different people and groups at the higher levels,” San Diego lawyer Ramon Villas said in an interview with the Globe. “They forget that Equal Protection works for people of color. They forget that the government is very interested in seeing diversity and racial fairness in the state.”
The author of AB 979, Assemblyman Chris Holden (D-Pasadena), also responded to the group’s lawsuit in a statement late Monday.
“No surprise,” said Assemblyman Holden in his statement. “Some would rather maintain a status quo that doesn’t embrace diversity and inclusion.”
The AB 979 and SB 826 lawsuits
According to AB 979 the new law will 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. 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.
The bill is due to take effect at the end of 2021, with an additional year allowed for larger boards to find the greater number of minority board members needed. If companies don’t comply by the end of 2022, they may face fines between $100,000 and $300,000 for each offense.
Judicial Watch is also currently suing over a similar gender-based board quota-based law that was signed by the Governor in 2018. SB 826, which states that Company boards with 5 members must have at least 2 women while boards with 6 or more members must have at least 3 women, has already partially gone into effect in California, with the bill to become fully active at the end of 2021.
The group filed a lawsuit last year in an attempt to block the law, along with another lawsuit from the Pacific Legal Foundation. Like the AB 979 lawsuit, the groups have said that the law is unconstitutional due to the Equal Protection clause of the 14th Amendment. More specifically, the SB 826 lawsuits charge that it discriminates based on sex.
Both of the SB 826 lawsuits are currently ongoing with Judicial Watch expecting a trial sometime next year.
The AB 979 lawsuit is expected to follow roughly the same timetable, with a trial coming before the law is set to take effect at the end of 2022.