California’s Diversity Quota for Corporate Boards Ruled Unconstitutional

A Los Angeles court has restored a hint of sanity to California.

On Friday, Judge Terry Green ruled a controversial state law unconstitutional.

Assembly Bill 979 required publicly traded companies in California to add individuals from “underrepresented communities” to their corporate boards.

The conservative legal group Judicial Watch successfully argued the law violated the equal protection clause in the Constitution of California.

As representatives for Judicial Watch explained in a press release:

Judicial Watch announced Friday that a California court ruled unconstitutional the state's racial, ethnic, and LGBT quota for corporate boards of directors (Robin Crest, et al. v. Alex Padilla, in his official capacity as Secretary of State of the State of California (No.20ST-CV-37513)). The court granted Judicial Watch's motion for summary judgment in its taxpayer lawsuit asking the court to declare the quota scheme unconstitutional under California's constitution.

This lawsuit was filed October 2, 2020 by Judicial Watch in the Superior Court of the State of California County of Los Angeles on behalf of three California taxpayers (Robin Crest, Earl De Vires and Judy De Vires) to prevent California from enforcing Assembly Bill 979 (AB 979). The bill requires that boards of directors of California-based, publicly held domestic or foreign corporations satisfy a racial, ethnic, and LGBT quota by the end of the 2021 calendar year.

“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 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.”

In ruling on behalf of the taxpayers, the court agreed with Judicial Watch that any expenditure of taxpayer funds or taxpayer-financed resources on AB 979 is illegal under the California Constitution. As Judicial Watch noted in motion for summary judgment:

Laws that explicitly distinguish between individuals on racial or ethnic, sexual preference, and transgender status grounds fall within the core of the prohibition of the equal protection clause.

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.”

Judicial Watch's attorneys also argued:

AB 979 and Defendant's justifications also plainly “embody stereotypes that treat individuals as the product of their race, [ethnicity, sexual orientation, or transgender status] evaluating their thoughts and efforts—their very worth as citizens—according to [] criterion[s] barred to the Government by history and the Constitution.” In the end, AB 970 is simply a numerical set-aside that amounts to racial, ethnic, and LGBT balancing. ([“Racial balancing is not transformed from ‘patently unconstitutional' to a compelling state interest simply by relabeling it ‘racial diversity.'”].)

Judicial Watch completed a trial in a separate lawsuit in Los Angeles County Superior Court on behalf of California taxpayers to prevent the state from implementing a 2018 law (SB 826) requiring publicly-held corporations headquartered in California to have at least one director “who self-identifies her gender as a woman” on their boards by December 31, 2019 (Robin Crest et al. v. Alex Padilla (No.19ST-CV-27561)).

In January 2021, Judicial Watch filed a public comment with the Securities and Exchange Commission (SEC) in response to a proposed rule change requiring race and gender quotas on the boards of corporations listed on the Nasdaq exchange. The proposed rule would require a self-identifying female and a self-identifying member of certain listed racial backgrounds, or an explanation from the company as to why it does not have at least two directors on its board who self-identify as such.

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