Judge: California law on women on corporate boards is unconstitutional

LOS ANGELES (AP) — A Los Angeles judge has ruled that California’s landmark law requiring women on corporate boards is unconstitutional.

Superior Court Judge Maureen Duffy-Lewis said the law that would have required boards to have up to three women directors by this year violated the right to equal treatment. The decision was dated Friday.

Conservative legal group Judicial Watch had challenged the law, saying it was illegal to use taxpayer funds to enforce a law that violates the California Constitution’s Equal Protection Clause by imposing a gender-based quota.

David Levine, a law professor at the University of California’s Hastings College of the Law, said he was not surprised by the verdict. Under state and federal laws, “imposing a quota like this was never going to fly,” Levine said.

State Senate Leader Toni Atkins, a Democrat from San Diego, said the decision was disappointing and a reminder “that sometimes our legalities don’t match our realities.”

“More women on boards means better decisions and companies that outperform the competition,” Atkins said in a statement. “We believe this law remains important, despite the discouraging decision.”

The ruling comes just over a month after another Los Angeles judge ruled that a California law requiring companies to diversify their boards with members of certain racial, ethnic or LGBT groups was unconstitutional.

Corporate diversity legislation followed legislation requiring women on corporate boards. The judge in the previous case ruled in favor of Judicial Watch and the same plaintiffs without holding a trial.

The law struck down on Friday was on shaky ground from the start, with legislative analysis indicating it could be difficult to defend. Then-Governor. Jerry Brown signed it despite the possibility of it being canceled because he wanted to send a message to the #MeToo era.

In the three years it was published, it has been credited with improving the position of women on corporate boards.

The state defended the law as constitutional saying it needed to reverse a culture of discrimination that favored men and was only put in place after other measures had failed. The state also said the law did not create a quota because boards could add seats for women directors without stripping men of their positions.

Although the law provided stiff penalties for failing to file an annual return or breaking the law, a chief of the secretary of state’s office admitted during the trial that he was toothless.

No fines were ever issued and there was no intention to do so, Betsy Bogart testified. Additionally, a letter that surfaced during the trial of former Secretary of State Alex Padilla warned Brown weeks before he signed the law that it was likely unenforceable.

“Any attempt by the Secretary of State to collect or enforce the fine would likely exceed his authority,” Padilla wrote.

The law required public companies headquartered in California to have a member who identifies as a woman on their board of directors by the end of 2019. In January 2022, boards of five directors were required to have two women and councils of six or more members. were to have three wives.

The Women on Boards Act, also known by its bill number, SB826, provided penalties ranging from $100,000 in fines for failing to report board compositions to the office of the California Secretary of State. $300,000 for several failures to have the required number of female board members.

The secretary of state’s office said 26% of publicly traded companies headquartered in California said they met the quota for female board members last year, according to a March report.

Half of the 716 companies that had been required to comply with the law did not file disclosure statements.

Supporters of the law hailed it for achieving more gains for women. Other states have followed California’s lead. Washington state passed a similar measure last year, and lawmakers in Massachusetts, New Jersey and Hawaii have proposed similar bills. Illinois requires publicly traded companies to report the composition of their boards of directors.

Assistant Attorney General Ashante Norton said alternatives to a law mandating seats for women had been tried in California to no avail. In 2013, for example, the legislature passed a resolution to get corporations to add women to their boards, but few have done so.

Before the California law took effect, women held 17% of the total number of seats on the boards of California-based companies on the Russell 3000 Index of the largest companies in the United States, according to the advocacy group 50/50 Women on Boards. By the end of last year, the percentage of board seats held by women had risen to 32% in California, compared to nearly 27% nationally.

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