California passed law mandating Race and Gender quotas for corporate board of companies based in the state — which includes a wide range of high tech, entertainment, and other large companies. When California passes such laws, whether for automobiles or corporate boards, it has a huge national impact give the size of Californias economy.
The laws were challenged in court by Judicial Watch, and victories were obtained in the trial courts relating to both laws. We covered the results earlier this year. The first involved racial quotas, and the court rejected the now-fashionable concept of discrimination to achieve “equity,” California’s Corporate Board Diversity Quota Law Held Unconstitutional. From the ruling:
If demographically homogenous boards are a problem, then heterogeno s boards are the immediate and obvious solution. But that doesn’t mean the Legislature can skip directly to mandating heterogenous boards. The difficulty is that the Legislature is thinking in group terms. But the California Constitution protects the right of individuals to equal treatment. Before the Legislature may require that members of one group be given certain board seats, it must first try to create neutral conditions under which qualified individuals from any group may succeed. That attempt was not made in this case.
The second involved gender quotas, and again the law was held unconstitutional, California Law Mandating Female Quotas on Corporate Boards Judged Unconstitutional, In Victory For Judicial Watch
In the Court’s 23-page verdict, the Court specifically found that “S.B. 826’s goal was to achieve general equity or parity; its goal was not to boost California’s economy, not to improve opportunities for women in the workplace nor not to protect California taxpayers, public employees, pensions and retirees.”Further, the Court found that “putting more women on boards demonstrated that the Legislature’s actual purpose was gender-balancing, not remedying discrimination.” “There is no Compelling Governmental interest in remedying discrimination in the board selection process because neither the Legislature nor Defendant could identify any specific, purposeful, intentional and unlawful discrimination to be remedied,” Judge Duffy-Lewis said.
Stays against the injunctions has been issued, but those stays were just lifted in rulings in both cases by the California Court of Appeal. Judicial Watch announced the results:
Judicial Watch announced today that the California Court of Appeal has upheld two injunctions against California quota requirements for corporate boards. Earlier this year, two California trial courts had found (here and here) unconstitutional state quota mandates for sex, race, ethnicity, and LGBT status. On December 1, 2022, the California Court of Appeal denied (here and here) two separate emergency requests by the California Secretary of State to lift the injunctions.“The California courts again have 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. Judicial Watch’s legal team has helped protect the civil rights of every American with these successful lawsuits,” stated Judicial Watch President Tom Fitton.
A detailed analysis of the case and the appeals court ruling is at the Harvard Law School Forum on Corporate Governance, which notes that under California procedure, the lifting of the stays does not necessarily reflect how the court ultimately will rule:
You may recall that, earlier this year, two Los Angeles Superior Courts struck down as unconstitutional two California laws mandating that boards of public companies achieve specified levels of board diversity and enjoined implementation and enforcement of the legislation. Those injunctions, however, were temporarily lifted as the state appealed. Now, the appeals court has vacated those temporary stays. What does it mean for the diversity legislation?* * *Those cases are being appealed by the State, and, in both cases, the California Secretary of State petitioned for a writ of supersedeas seeking stays, pending appeal, of the enforcement of the permanent injunctions imposed by the lower courts. (See this PubCo post.) In the meantime, the appeals court had temporarily lifted the permanent injunctions, to the extent those injunctions required the State to modify its procedures for or enjoin collecting and reporting data otherwise required under the applicable statutes, pending further order of the appeals court. (See the SideBar in this PubCo post.)At the end of last week, the California appeals court denied the State’s petitions for writ of supersedeas in these cases and vacated the temporary stays—meaning that the injunctions against implementation and enforcement of these two statutes are back in place. Do these Orders suggest that the appeals are unlikely to succeed on the merits? Some reading the tea leaves would contend that they do. Former California state senator, Hannah-Beth Jackson, author of SB 826, the board gender diversity legislation, told me that, although the court’s Order was a summary denial, providing no guidance as to its reasoning, she believes the Order was based largely on the issue of standing argued in the writ and not on the larger, more substantive issues that will be addressed in the appeal, which she believes will be winning arguments. Time will tell.
California civil procedure drives me crazy.
But it does seem that if the appeals court lifted the stays on the injunctions, then it’s likely to deny the appeal by the state on the substance. For now, race and gender quotas for corporate boards are enjoined.
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