Court Shoots Down California Corporate Diversity Law

A controversial California law mandating corporate boards with members of certain “underrepresented groups” is unconstitutional, according to an LA judge.

The Friday ruling came in response to a lawsuit charging that the measure to require a board member to be from an “underrepresented community,” including LGBT, Black, Latino, Asian, Native American or Pacific Islander violates the state’s constitutional equal protection clause. The judge’s legal reasoning was not revealed in the decision.

The 2020 law ordered corporations with a main office in California to include at least one member from the listed groups on their board of directors by Dec. 31 of last year. Compliance could be reached by either adding a new seat or filling a vacant one.

The measure went on to require two such directors on boards with four to nine directors by the end of 2022 and three directors with boards of more than nine. Fines of $100,000 for a first violation and $300,000 for repeat violations could result for those who failed to comply.

A “Diversity on Boards” report last month issued by the state said that about 300 of some 700 corporations had complied with the law. However, the secretary of state’s office noted that half of the corporations did not file the disclosure statement as required.

The state knew from the start that the mandate would prove difficult to defend in court. Then-Gov. Jerry Brown, even as he signed it into law, said it could be overturned when challenged.

The suit was filed by the legal group Judicial Watch, which has a similar lawsuit in the LA system challenging a 2018 state law requiring a woman be placed on corporate boards of directors. Opponents of both measures argue that they amount to numeric quotas, something the U.S. Supreme Court has repeatedly declared illegal.

Judicial Watch President Tom Fitton said in a statement that the law was a “blatant and significant attack” on “constitutional prohibitions against discrimination.”

As attractive as it is for social justice bean-counters to legislate society into their image of fairness and equality, the Supreme Court has consistently ruled for over four decades that quotas and set-asides are unconstitutional. Despite this, California continues to divert attention and resources away from real-world needs to implement fantasy-world mandates, with predictable results.