California Court Rules Taxpayer Lawsuit Against Gender Quotas for Corporate Boards May Go Forward | Eastern North Carolina Now

Press Release:

    Washington, DC     Judicial Watch announced today that a California court authorized a taxpayer lawsuit to move forward against a California law that mandates gender quotas for corporate boards. The court held that Judicial Watch's clients have standing to sue under state law. Judicial Watch attorneys will now proceed to discovery, including depositions of various officials.

    This action comes in the case (Robin Crest et al. v. Alex Padilla (No.19ST-CV-27561). Judicial Watch filed the lawsuit on August 6, 2019, 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. 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.

    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.

    Even 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."

    There are currently 625 publicly-traded corporations headquartered in California that are subject to the legislation's provisions. In a March 2020 report the secretary of state identified 282 corporations that reported compliance with the law's requirements.

    "We are pleased that the court saw through California's flimsy claim that taxpayers had no standing to sue to stop this brazenly unconstitutional gender-quota law," said 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."