9th Circuit Reinstates Lawsuit Challenging California Board Room Gender Quota Law
Finds that shareholder of corporation has standing to sue: “because [the shareholder] has plausibly alleged that SB 826 requires or encourages him to discriminate on the basis of sex, he has adequately alleged that he has standing to challenge SB 826’s constitutionality”
Califoria leads the way in trying to legislate how private entities have to conduct business in order for the state to achieve the “diversity” it wants in the private workplace.
There were laws that prohibit discrimination and require equal opportunity, but there were no laws preexisting outcomes by race or sex. Until California passed a law with gender diversity mandates for private corporate boards of directors.
The law had the intended impact:
The California law requiring a minimum number of women on public company boards has decimated the number of all-male boards since it passed in 2018, new data from the California Partners Project shows.
Two years ago, 180 of the 650 public companies in California that are subject to Senate Bill 826 had zero women on their boards. That number has since shrunk to just 15, or 2.3% of company boards.
Notably, only two companies in California — San Francisco-based Gap Inc. and Oakland-based e.l.f. Cosmetics — have five or more women on their boards, according to the project, a state initiative founded by Jennifer Siebel Newsom, the wife of Gov. Gavin Newsom.
Because so many major tech companies are headquartered in California, the law had national implications:
Effective, but possibly illegal.
The Philanthropy Roundtable blog reports on the California law and a recent 9th Circuit decision:
In California, all publicly-traded corporations incorporated or headquartered in the state are mandated by law to have a certain number of female board members. As you know, the Philanthropy Roundtable filed an amicus brief in support of the Pacific Legal Foundation’s lawsuit (Meland v. Weber) to challenge this law on the grounds that it forces companies to discriminate on the basis of gender in their board member selections.
A district court dismissed the Meland case on procedural grounds, finding that the plaintiff lacked the standing to sue. However, on June 21, the U.S. Ninth Circuit Court of Appeals reversed the lower court’s decision. This means the case has the greenlight to move forward and be argued on its merits. This is an important victory in the fight against a patently discriminatory law.
As a reminder, Meland v. Weber pertains to a California law imposing gender mandates on public corporations incorporated or headquartered in the state. Each corporation is required to have had at least one female director by the end of 2019 and one, two, or three women depending on the size of the board by the end of 2021. The law also imposed reporting requirements to demonstrate that corporations are in compliance with the law. These disclosures would provide ample ammunition for public shaming and pressure campaigns by activists, stakeholders and staff. Non-compliant companies could be penalized with fines ranging from $100,000 to $300,000 per violation.
Creighton Meland, Jr. is a shareholder of OSI Systems, Inc., a California-based publicly-traded company. He sued the state arguing that the law discriminates on the basis of sex in violation of the Equal Protection Clause, and it actually seeks to force shareholders like him to perpetuate sex-based discrimination.
Without tackling the merits of his argument, the Ninth Circuit Court found that Meland did have standing to sue the state. The Court explained in its opinion: “We have long held that ‘[a] person required by the government to discriminate by ethnicity or sex against others has standing to challenge the validity of the requirement, even though the government does not discriminate against him.’”
The Pacific Legal Foundation case page has the key court documents, including the June 21, 2021, 9th Circuit Decision, which reads in part:
California Senate Bill 826 (SB 826) requires all corporations headquartered in California to have a minimum number of females on their boards of directors. Corporations that do not comply with SB 826 may be subject to monetary penalties. The shareholders of OSI Systems, Inc., a corporation covered by SB 826, elect members of the board of directors. One shareholder of OSI, Creighton Meland, brought an action challenging the constitutionality of SB 826 on the ground that it requires shareholders to discriminate on the basis of sex when exercising their voting rights, in violation of the Fourteenth Amendment. We hold that because Meland has plausibly alleged that SB 826 requires or encourages him to discriminate on the basis of sex, he has adequately alleged that he has standing to challenge SB 826’s constitutionality. See Monterey Mech. Co. v. Wilson, 125 F.3d 702, 707 (9th Cir. 1997).
The standing hurdle, while it doesn’t go to the merits, is where many a challenge to government overreach ends. SCOTUS just tossed the recent Obamacare challenge on “standing” grounds. So this is an important step forward for the lawsuit.
The case also is significant because there will be more lawsuits challenging the constitutionality of other “equity” driven laws and practices.
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Comments
If you want it run like a household, get a woman. Feelings first.
If you want it run like a system, get a man. Structure channels feelings.
California is a feelings state.
Corporations will soon be run like school boards.
It would make more sense for California to pass a law requiring each board of directors to have at least one member with an IQ exceeding 100.
Go beyond sex-correlated gender: masculine and feminine, directly to principles of individual dignity, individual conscience, do not pass diversity [dogma] (e.g. sexism), do not indulge affirmative discrimination, do not back transConstitutional amendments, do not dwell at the Twilight fringe. Choose the best man or woman for the job.
Nw do basketball cali, then football and so on.
I guess someone has to ask: Where does this fit in with actual sex (binary) or will there be issues over “identifying as” situations?
And of course, what percentage of the public will default to the AA position: all females board members are only there because of this requirement, that they could not have achieved that position legitimately.
Its all eyewash. Window dressing.
I question the characterization of the law as “effective.” To assess, we need to understand what the ratios were like prior to the law, and we also need to compare to ratios in other states where there is no such law and over the same period of time.
“Two years ago, 180 of the 650 public companies in California that are subject to Senate Bill 826 had zero women on their boards. That number has since shrunk to just 15, or 2.3% of company boards.”
That’s how effective it’s been. It’s completely implausible that that much “progress” has been made in other states over that period, or that it would have been made in CA without the law.
But what is the point? How is this progress? In what way does anybody benefit from this change, except the women who have been thus artificially elevated and given positions that they do not deserve? And of course their benefit is exactly counterbalanced by the loss suffered by the men whom they displaced. In addition the company suffers a loss by not having access to the best board it could have had; making for a net loss to society overall.
Well the claim is that male dominated boards self select i.e. tend to select other guys pushing out female candidates of merit. In terms of evidence I haven’t looked at the subject so no idea on the strength of the claim. It seems intuitive that board members pick those they know and not necessarily on merit, the idea that board rooms are chosen purely on merit seems far fetched to me. My view may be warped on that mind, the UK is notorious for the old boy club and generally stitching up appointments to positions of power.
Directors are chosen by the shareholders, especially the major investors (mostly institutional), and it’s their money on the line so they’re obviously going to pick the best directors they can. That’s just completely obvious; who can possibly make better choices than they can?
That they tend to choose among people they know and trust is also obvious. That is merit. Even if some stranger might end up doing a better job, how can they possibly know or predict that? And who else could predict it better than they can? And that’s why networking exists; if you want to do business you need to know people.
There’s nothing “unfair” about it, it’s just a fact of life that if you want people to entrust their livelihood to you they have to know you and be able to trust that you’ll do a good job. Attempts to manipulate this by force are morally perverse and guaranteed to produce inferior results.
Depends on the structure of the company, that’s not always the way. Not all companies are structured to have shareholder/institutional investors. Again the shareholders pick people that best represent there interests in there view. That’s true up to a point but at least part of that thought process is biased. These people tend to run in small circles with like minded types, they pick in part people who reflect themselves. That’s been the way of it for years.
Knowing and trusting someone is entirely different from merit. Who is the best qualified for the job doesn’t necessarily entail knowing them personally. I don’t think the claim is to promote a stranger its to judge women and men on an equal footing without the ‘not one us’ mentality creeping in. The women wont be strangers, they will be known employees with CV’s, test scores etc etc.
This is the issue though isn’t it. Men have tended to get promoted despite the failings they might have just because they are friends with someone not due to merit. I’ve seen useless idiots promoted far to many times to think that its any other way.
I have served on boards for hospitals, insurance carriers and other organizations over the years, and all of them (with no exceptions) already had stringent standards in place to ensure the most qualified and dedicated people were appointed. That’s how it should be.
In the case of my profession, medicine and health care is already well over 50% women and quite diversified in demographics. This kind of legislation is not only unnecessary, but just another feel-good exercise for Granolifornia leftists. One has to admire their consistency in always choosing sloganeering and superficiality over recognizing what already exists.
Out of interest how many women were on the board?
“…all of them (with no exceptions) already had stringent standards in place to ensure the most qualified and dedicated people were appointed.”
How? What objective criteria could possibly be formulated that can judge how a person will perform as a director? It seems to me to be by nature an entirely subjective process.
It is a subjective process masquerading as a objective process. The “objective” criteria are subjectively derived.
Public or non-profit institutions do not have share holders or owners and so select board members my other means than shareholder or owner preference. Often these are politically appointed. Often, too, there are certain criteria placed on who can serve, such as certain years of experience in a field, certain professional or educational credentials, and yes, sex, race, and even political affiliation.
But the point is, the California law imposes mandates on private businesses, not public entities, and is simply a part of the fascist march to turn private entities into de facto public entities which only have the appearance of private control who are allowed to exist in the mirage well compensated as long as they conform to and support the demands and objectives of the state.
Please be aware that fascism is a leftist construct and not one of the right as the left likes to proclaim as a matter of misdirection. We are not marching towards communism, but rather to fascism. Communism may be the ultimate objective, I do confess, the road to that evil destination runs through a preliminary fascist state.
@BSR
“fascism is a leftist construct”
No not really fascism is charachterised by it’s rejection of communism and of conservatism since by it’s very nature it’s a one party state with a single dictator. By definition a communist society wouldn’t elevate an individual to total power and conservatism doesn’t like big government which is inherent in a controlling one party state. It’s often charachterised as having nationalistic and purity elements too. To be honest use of the term seems to be a perjorative without reference to facts on the ground.
Can we replace Jack Dorsey with Kim Klacik?
Replace him with potted plant.
Aye, a much better solution.
The obvious solution is that if a company’s board happens to be all male, at each meeting one director must take a turn at identifying as female for the day. Viola.
Or a musician.
Celeste?
Indeed, under current leftist dogma, this is entirely feasible.
President Trump needed another term to flip this Court.
Worse, ALL of the cases they take that are political like this one, the selection of which of the Judges on the Circuit hear the case just *miraculously* turns out to be at least a 2:1 majority Leftard.
Case after case, when its important to their ideological agenda, the “random” draw of which judges on the panel always heavily favors them by far more than the overall imbalance on the Circuit.
Huh? What can you possibly mean by that? How can you claim that all the panels are chosen to produce a leftist decision, when you have this very case in front of you as a counterexample?! Even if you were correct in general, if you wanted to make a claim like that, you would need to make it while commenting on a case that came out the wrong way, so you can complain about it and allege that it’s a systemic problem. Making it while commenting on a case that came out the right way is just weird. It’s like pointing to a beautiful painting while complaining that all modern art is ugly; if you want to claim that, find an ugly painting to point to while you’re doing so!
Roberts
“Lack of standing” seems to be in vogue in today’s courts. Is there a precise definition of what is required to apply these case dismissals? It sure seems to me that this is being stretched to dismiss cases that courts just don’t want to hear for whatever reason (politics e.g.).
Its not in vogue, its been around forever. And yes it has a reasonably precise definition.
1)Injury: The plaintiff must have suffered or imminently will suffer injury. The injury must not be abstract and must be within the zone of interests meant to be regulated or protected under the statutory or constitutional guarantee in question.
2)Causation: The injury must be reasonably connected to the defendant’s conduct.
3)Redressability: A favourable court decision must be likely to redress the injury.
I’m sure there are other aspects and more in depth views on this but in principle its actually quite straight forward.
Yeah right, like all of those corrupt states that ran rigged elections in 2020 didn’t incur injury on the states that weren’t corrupt. A stolen national election is not an injury according to SCOTUS. It seems more likely to me that these corrupted federal courts have found their favorite hammer to deal with all of those pesky nails.
The injury wasn’t to those states though was it, the injury (if there even was one) was to the the states themselves that may or may not have suffered from election fraud. The state lawsuits were widely considered to be a frivolous PR stunt.
A stolen national election of which you have no evidence. That’s your wild assertion. Still waiting for that kraken.
Good grief.
Sorry not an up vote that was a down vote big fingers
That’s right, they didn’t inflict injury on other states. How Pennsylvania chose its electors is none of Texas’s goddam business. Texas got its 38 electors, and they voted as Texans had told them to, and that’s all Texas is entitled to. No other state got more electors than it was entitled to, so Texas’s vote was not diluted; it had precisely the strength it’s supposed to have: 38 / 538. It has not been injured by not getting the result it wanted, no matter how that came about.
If you’d never heard of standing before this past year then you should not comment on legal topics at all, because you just make a fool of yourself. Standing is a fundamental component of our legal system, and one of the things that stop the judiciary from turning into a tyranny.
Then maybe you Homer Simpson School of Law grads should stop preaching about CA is destroying the country and constantly bashing us CA voters.
https://californiaglobe.com/section-2/bombshell-california-has-1-8m-more-registered-voters-than-it-should/
Wait until all of these election audits start reporting their conclusions. Maybe then you will grasp the concept of how corrupt states is a NATIONAL issue where EVERY STATE has legal standing to file lawsuits.
Unbelievable.
How can it not be critical to the State of Texas that the winner of Pennsylvania not be fraudulently determined? Of all states, Texas is probably suffering the most under the current administration, buried in illegal aliens and having to allocate major state resources to deal with it..
Pasadena Phil, EIPCa is hardly a “nonpartisan” group. And it’s got a long history of making claims that are hard to substantiate. In this case the answer to the “Bombshell” is actually simple:
1. The “Eligible to Register” number is an estimate based on census numbers. It could very easily be wrong, and is provided only for information purposes.
2. EIPCa is including inactive registrations in its totals. The very report they cite for the eligible figures notes a much lower figure for registered voters, presumably because it doesn’t include inactive registrations. Inactive registrations don’t get ballots in the mail, or any election material, and can only vote if they show up in person with proof of residence. In all likelihood very few inactive registrants voted, so the fact that they haven’t been cleaned off the rolls isn’t the huge deal that EIPCa wants to make it out to be. Legally voters can’t be cleaned off the roll without positive proof that they’re no longer eligible, which is often just not available.
Further to Pasadena Phil: In any event, the electoral college means it doesn’t matter how poorly CA runs its elections; it still gets the same number of electors, so it’s none of any other state’s business.
Jb4, see above. How PA chooses its electors does not affect Texas at all. It’s none of Texas’s business. Texas is not entitled to have its preferred election result, it’s only entitled to 38/538 of the decision, and it had that.
@milhouse
Interesting thanks,
“If you’d never heard of ________ before this past year then you should not comment on legal topics at all, because you just make a fool of yourself.”
says the bona fide legal expert, lol