TheCorporateCounsel.net

As this NY Times article notes, last week Judge Terry Green of Los Angeles County Superior Court found that Assembly Bill 979, which required publicly traded companies based in California to have board members from underrepresented communities, violated the state’s constitution. Judicial Watch, which had filed the lawsuit shortly after the law was signed into law, had argued that the law was unconstitutional because it mandated quotas and therefore violated the state’s equal protection clause. In the court’s order granting summary judgment in the case, Judge Green notes:

If demographically homogeneous boards are a problem, then heterogenous 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 try to create neutral conditions under which qualified individuals from any group may succeed. That attempt was not made in this case.

There is no indication yet of what is expected next in this litigation.

– Dave Lynn