A California state court recently struck down that state’s attempt to impose racial, ethnic and LGBT quotas on boards of directors of publicly traded corporations with headquarters in the state.
Judge Terry Green of the Central District of California granted summary judgment to three state taxpayers who sued the California Secretary of State over Assembly Bill 979 (AB 979), passed by the state legislature in 2020, which required corporations to comply with quota requirements by the end of 2021, which were then increased for 2022.
The taxpayers are represented by Judicial Watch, a conservative, non-partisan educational foundation that “seeks to ensure that political and judicial officials do not abuse the powers entrusted to them by the American people.”
AB 979 required publicly traded corporations headquartered in California to have, by the close of 2021, a minimum of one director from an “underrepresented community” on its board, as defined in the statute. And by the end of 2022, corporations with nine or more directors were required to have three such directors, with two directors from underrepresented communities for corporations with five to eight directors.
The law defined “underrepresented community” as “an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.”
The problem is, however, that such a law violates the California Constitution’s guarantee of equal protection of the laws (Article I, Section 7), as Judicial Watch alleged in its lawsuit. Essentially, the state of California cannot pass a law and expend taxpayer funds to enforce a law that draws distinctions between groups of people, unless it has a compelling interest.
And a belief that the private business sector has historically discriminated against certain underrepresented minorities in the composition of boards of directors is not a “compelling interest.”
“This historic California court decision declared unconstitutional one of the most blatant and significant attacks in the modern era on constitutional prohibitions against discrimination,” said Judicial Watch President Tom Fitton in a press release. “In its ruling [on April 1], 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.”
Even the California Assembly understood that AB 979 was constitutionally suspect when it passed the bill, according to Judicial Watch.
“Indeed, a Senate Floor Analysis produced during deliberation on the legislation concluded the bill draws distinctions based on race and ethnicity, and therefore, it is ‘suspect’ and that ‘the existence of general societal discrimination will not ordinarily satisfy courts.’ Also, according to the Assembly Appropriations Committee, AB 979 ‘will result in ongoing costs in the hundreds of thousands of dollars to gather demographic information and compile a report on this data on its internet website.’”
Although Judge Green did not issue a detailed opinion outlining his reasons for granting summary judgment, he undoubtedly looked to the U.S. Supreme Court’s decision in Parents Involved in Community Schools v. Seattle School District No. 1, in which Chief Justice John Roberts famously opined, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.”
In other words, the government cannot rectify what it perceives to be discrimination by imposing its own form of discrimination in return.
Judicial Watch is also challenging another California law, SB 826, that imposed quotas on publicly held corporate boards to include at least one director “who self-identifies her gender as a woman.” That lawsuit is still in progress.
The “underrepresented minority” case is Crest v. Padilla.
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