A Los Angeles judge has tossed a California law mandating that publicly traded corporations include on their boards racial minorities or members of the LGBTQ community, the latest defeat for Democrats as their equity push runs afoul of anti-discrimination laws.
Superior Court Judge Terry Green granted summary judgment Friday to Judicial Watch, the legal watchdog group that sued to overturn the 2020 law, arguing that it violates the state constitution’s equal protection clause.
“This historic California court decision declared unconstitutional one of the most blatant and significant attacks in the modern era on constitutional prohibitions against discrimination,” Judicial Watch President Tom Fitton said in a statement.
“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,” he said.
Assembly Bill 979 required foreign or domestic companies with their main offices in California to name at least one director from “underrepresented communities” by the end of 2021.
“The bill defines a director from an 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 California governor’s office said.
Democratic Gov. Gavin Newsom signed the bill in September 2020, shortly after protests and rioting broke out nationwide over a Minneapolis police officer killing George Floyd.
The bill’s sponsor, Democratic Assemblymember Chris Holden, called the bill a “win-win as ethnically diverse boards have shown to outperform those that lack diversity,” while Judicial Watch blasted it as a “quota scheme.”
Judicial Watch also has challenged California’s Senate Bill 826, the 2018 law that requires publicly traded companies to include at least one woman on their boards.
The California Partners Project, which supports the corporate mandates, called the judge’s ruling “disappointing but not determinative.”
“Companies continue to face legal requirements to recruit women to their boards, as well as strong pressures from investors motivated first and foremost by the better outcomes produced by diverse board leadership,” said the project in a statement.
The one-page order on AB 979 did not explain the judge’s reasoning, but The Wall Street Journal editorial board said the decision suggested “it was so obviously unconstitutional that it didn’t merit a full trial.”
SEE ALSO: Senate Judiciary Committee delays vote for Ketanji Brown Jackson
Boards with four to nine directors would have been required to have at least two such directors by the end of 2022, while boards with nine or more directors would have needed to have three directors from “underrepresented communities.”
First-time violations were punishable by fines of $100,000 and $300,000 for repeat violations.
Judge Green’s order represented the latest courtroom setback for Democrats, starting with President Biden and his race-conscious initiatives on pandemic relief.
In May, a federal judge in Texas ruled against his $29 billion Restaurant Revitalization Fund that gave initial preference to women, veterans and “socially and economically disadvantaged” people after the policy was challenged by a White restaurant owner.
The same month, the 6th U.S. Circuit Court of Appeals ruled 2-1 against the Small Business Administration program in a case brought by Antonio Vitolo, the owner of Jake’s Bar and Grill in Harriman, Tennessee.
“Vitolo challenges the Small Business Administration’s use of race and sex preferences when distributing Restaurant Revitalization Funds,” the May 27 opinion stated. “The government concedes that it uses race and sex to prioritize applications, but it contends that its policy is still constitutional. We disagree.”
The president’s $4 billion debt-forgiveness program for non-White farmers and ranchers also met with a string of defeats before U.S. District Court Judge S. Thomas Anderson called a halt to the program in July with a nationwide injunction.
The Mountain States Legal Foundation, which had sued on behalf of White farmers, advised Mr. Biden afterward to “toss in the towel.”
“What’s it going to take for the Biden-Harris administration to comply with the Constitution?” foundation general counsel William E. Trachman said. “Now that their discriminatory farming and ranch debt relief has been enjoined by another court as a violation of the equal protection clause, the writing is on the wall. It’s time to treat all of us like Americans, regardless of our skin color.”
Mr. Biden set the tone at the start of his presidency by signing a whole-of-government order on advancing “equity.”
The term, which has been embraced by the social-justice movement, refers to equality of outcomes, not simply equality of opportunity.
“The Federal Government’s goal in advancing equity is to provide everyone with the opportunity to reach their full potential,” Mr. Biden said in signing the Jan. 20, 2021, order.
Supporters of California’s law on adding women to corporate boards argue that the mandate has resulted in more women on boards.
For example, the number of women on California boards has increased by 15.5% since the 2018 law was signed, according to the California Partners Project.
“All-male boards are essentially a thing of the past among California’s public companies — and that gives us a competitive edge,” project co-founder Jennifer Siebel Newsom, wife of Gov. Gavin Newsom, said in December.
Former California state Sen. Hannah-Beth Jackson, who authored SB 826, pointed out that “not a single California company has stepped forward as a plaintiff.”
“These suits reflect the desperation of the far-right to perpetuate discrimination that undermines the economic and corporate success that occurs as a result of legislation that opens up opportunity for all,” she told MarketWatch.
Another legal battle on the corporate-board front is underway over the Security and Exchange Commission’s approval of the Nasdaq Stock Market’s rules on the gender, race and sexual identity of board members.
The rule requires listed companies to have or to explain why they do not have at least two women, minority or LGBTQ board members, which two of the SEC commissioners praised as “a step forward for investors on board diversity.”
Those opposing the measure include 17 Republican state attorneys general, who called the SEC-approved rules in a December amicus brief “particularly crude and odious: outright quotas rather than any sort of holistic analysis or plus factor.”