A Los Angeles Superior Judge found that California’s women on boards law, which required publicly traded companies to have at least one female board of director, was unconstitutional May 13.
The 2018 law by Sen. Hannah Beth-Jackson (D-Santa Barbara) required publicly held Californian companies to have at least one female director by January, 2020, and, depending on board size, to have up to three female directors by January, 2022.
Judge Maureen Lewis ruled the law discriminated by gender, forcing her to strictly scrutinize the law. Strict scrutiny requires a compelling state interest, and a solution that is narrowly tailored to achieve that state interest, for a law to be considered constitutional.
The state claimed three compelling state interests for the law:
- To eliminate and remedy discrimination in the director-selection process of publicly held boards
- To increase gender diversity on the boards of publicly held corporations to benefit the public and the state economy
- To increase gender diversity on publicly held corporations to benefit and protect California taxpayers, public employees and retirees
Preventing social discrimination is not a compelling government interest according to existing law, Lewis ruled, citing Hiatt v. City of Berkeley (1982).
For the second state interest, Lewis was not convinced by state arguments that a gender diversified board of directors resulted in higher economic output.
For the final state interest, the legislature could not identify any specific, purposeful, intentional and unlawful discrimination that Californians should be protected from, Lewis ruled.
Lewis found that the state’s witnesses attributed the differences in the numbers of men and women on corporate boards to reasons other than actual discrimination. The state also did not prove that the law actually remedied any unlawful discrimination.
“As to the claimed interest that SB 826 was passed to remedy discrimination, defendant has not met its burden to show that this is necessary nor narrowly tailored. Therefore, for all the above stated reasons and analysis the Court determines that SB 826 violates the Equal Protection Clause of the California Constitution and is thus enjoined.”
Case history
Three Californians filed the suit Aug. 6, 2019, and claimed enforcing the law was an unconstitutional use of taxpayer funds.
According to a legislative report, there are 761 publicly traded corporations headquartered in California, the majority of which the law would apply to.
Enforcing the law would have cost $500,000 each year, according to the Assembly Appropriations Committee.
Case information
Robert Sticht and Michael Bekesha of Washington, D.C.’s Judicial Watch represented the plaintiffs.
Deputy Attorney General Lara Haddad represented the state.
Case number 19STCV27561.
Read the complaint here.
Read the ruling here.
