Judicial Watch Sues California over Gender Quota Mandate for Corporate Boards

(Washington, DC) – Judicial Watch announced today that it filed a lawsuit in Los Angeles County Superior Court on behalf of three California taxpayers to prevent the State from implementing Senate Bill 826.  The 2018 law requires publicly-held corporations headquartered in California to have at least one director “who self-identifies her gender as a woman” on their boards by December 31, 2019 (Robin Crest et al. v. Alex Padilla (No.19ST-CV-27561)).Up to three such persons are required by December 31, 2021, depending on the size of the board. The lawsuit alleges that the mandate is an unconstitutional gender-based quota.

There are currently 761 publicly-traded corporations headquartered in California, the vast majority of which are subject to the legislation’s provisions. In a July 1, 2019, report, the secretary of state identified 537 corporations that fall short of the mandate.

Before the bill passed, a California Assembly floor analysis identified a “significant risk of legal challenges” to SB 826. It characterized the legislation as creating a “quota-like system” and noted, “[T]his bill, if enacted into law, would likely be challenged on equal protection grounds … The use of a quota-like system, as proposed by this bill, to remedy past discrimination and differences in opportunity may be difficult to defend.” In signing SB 826 in September 2018, then-Governor Brown wrote that “serious legal concerns have been raised” to the legislation. “I don’t minimize the potential flaws that indeed may prove fatal to its ultimate implementation.” He signed the bill anyway, noting “Nevertheless, recent events in Washington, D.C. – and beyond – make it crystal clear that many are not getting the message.”

In its complaint, Judicial Watch argues:

SB 826 is illegal under the California Constitution. The legislation’s quota system for female representation on corporate boards employs express gender classifications. As a result, SB 826 is immediately suspect and presumptively invalid and triggers strict scrutiny review.

California has followed a trend set in many European countries and the EU mandating gender quotas for corporate boards of directors. As a Boston Globe opinion piece notes, however, the outcome of Europe’s experiment was not what advocates of gender quotas predicted:

Progressives often support diversity mandates as a path to equality and a way to level the proverbial playing field. But all too often such policies are a disingenuous form of virtue-

­signaling that benefits only the most privileged and does little to help average people.

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Requiring companies to make gender the primary qualification for board membership will inevitably lead to less qualified private sector boards…exactly what happened when Norway adopted a nationwide corporate gender quota. According to a 2012 paper by USC professor Kenneth R. Ahern and University of Michigan professor Amy K. Dittmar, Norway’s gender quota “led to younger and less experienced boards … and deterioration in operating performance, consistent with less capable boards.”

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[Norway’s] gender quotas have not had significant effect on corporate culture or led to the promotion of more women throughout the ranks. In fact, the only thing Norway’s gender quotas have done is benefit the individual women actually selected to serve on the corporate boards.

Writing in The New Republic, Alice Lee notes that increasing the number of opportunities for board membership without increasing the pool of qualified women to serve on such boards has led to a “golden skirt” phenomenon, where the same elite women scoop up multiple seats on a variety of boards.

“California’s gender quota law is brazenly unconstitutional,” stated Judicial Watch President Tom Fitton. “Even Gov. Brown, in signing the law, worried that it is unconstitutional. Judicial Watch’s California taxpayer clients are stepping up to make sure that California’s Constitution, which prohibits sex discrimination, is upheld.”

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