UPDATE 1-California Law Requiring Women to Serve on Corporate Boards Has Been Overturned
(Adds decision and comment details)
By Jody Godoy
May 16 (Reuters) – A state court judge has declared unconstitutional a California law requiring public companies to include women on their boards, dealing another blow to the state’s efforts to diversify leadership companies.
Los Angeles Superior Court Judge Maureen Duffy-Lewis issued the ruling on Friday in favor of three California taxpayers who sought to block enforcement, according to a copy of the ruling.
Conservative legal group Judicial Watch represented plaintiffs in the case and another challenge that recently struck down a California law mandating board diversity based on race and sexual orientation.
“The radical left’s unprecedented attacks on the Anti-Discrimination Act have suffered yet another crushing defeat,” Judicial Watch President Tom Fitton said in a statement.
A spokesperson for the California secretary of state said the office is reviewing the judgment.
Three taxpayers challenged the law in 2019, saying it amounted to sex discrimination in violation of the state constitution.
The California secretary of state had defended the law at trial, arguing that the state has a compelling interest in gender diversity on corporate boards and that the law was designed to address a historic lack of women in the boards of directors.
Duffy-Lewis ruled that the law violated the Equal Protection Clause of the California constitution. The secretary of state had failed to show that the law was narrowly tailored or intended to remedy “specific, intentional, intentional and unlawful discrimination,” she wrote.
Passed in 2018, the law required California-based public companies to have up to three female directors and authorized the secretary of state to issue fines of up to $300,000 per violation. No fine was imposed.
The bill’s author, former California state senator Hannah-Beth Jackson, said she believes the state will appeal the verdict and prevail.
Judicial Watch recently won another taxpayer challenge to a similar California law requiring boards to include directors who identify as members of an “underrepresented community,” which includes Asian, Black, and Asian individuals. , Latinos, Native Americans and Pacific Islanders, as well as those who are gay, lesbian, bisexual or transgender.
Jennifer Rubin, a lawyer who advises companies on social and governance issues, said the secretary of state faces a high bar for appealing decisions.
“The prudent course of action is for the legislature to go back and try to write these laws in a way that stands up to scrutiny,” Rubin said.
Lawmakers could try an annual disclosure report similar to that instituted by stock exchange operator Nasdaq Inc, she said. The rule requires listed companies to include various members on their board or explain why they haven’t. (Reporting by Jody Godoy in Santa Ana, Calif.; Editing by Noeleen Walder, Jonathan Oatis and Aurora Ellis)