A federal judge in California has declared unconstitutional a state law mandating female, Black, Latino and LGBT representation on corporate boards, in a ruling that could have ramifications for attempts to enact similar laws in other Democrat-dominated states, including Illinois.
The law, enacted in 2020, would have required all public corporations headquartered in California to include a minimum number of directors on their corporate boards who are not straight cisgender white males.
The minimum number of “diverse” director candidates would range from one to three, depending on the size of the corporation’s board.
To meet the requirements of AB979, those “diverse” board members could number among a selection of “underrepresented groups,” including “Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native … gay, lesbian, bisexual, or transgender.”
An earlier California law, SB826, had required corporate boards to include a minimum number of female members, as well. In 2022, however, a Los Angeles County Superior Court judge ruled that law violated the California state constitution’s equal protection clause and blocked the state from enforcing that law.
That decision is under appeal.
In the years since the enactment of SB826, other states with left-leaning Democratic majorities have explored following California’s lead.
In Illinois, for instance, that state’s Democratic supermajority avoided running into the same constitutional challenges faced by California when lawmakers stripped out provisions of a bill strongly supported by State Rep. Emanuel “Chris” Welch.
In 2019, Illinois lawmakers debated a measure that would have required all corporations in Illinois to include at least one female, one Black and one Latino director on their corporate boards. That measure never received a vote, and was tabled.
Welch would go on in 2021 to become Speaker of the Illinois House of Representatives, ascending to the office following the resignation of now-indicted former House Speaker and Democratic Party strongman Michael J. Madigan.
Illinois lawmakers have not revived the earlier racial and gender quota mandate legislation.
California, however, took that step in AB979 over the opposition of business groups and others, who asserted the law represented an unconstitutional power grab by the state over the private affairs of businesses and illegal state-sanctioned racial and gender discrimination.
In promoting such laws, left-wing progressive politicians have argued the laws are intended to promote business and the economy overall.
Courts, however, have instead determined the purpose of such laws is to address discrimination by instead discriminating against those not included in the “underrepresented” groups.
In California, AB979 was challenged by a coalition of business interests and others known as the Association for Fair Board Recruitment.
In his ruling, Judge Mendez agreed, finding AB979 establishes illegal and unconstitutional racial and gender quotas in violation of the Fourteenth Amendment’s guarantees of equal protection under the law.
He rejected attempts by attorneys for California to argue the legislation didn't set strict quotas, but merely set a "flexible floor" for diversity on corporate boards.
“Despite Defendant’s (the state of California’s) attempt to semantically cast this requirement as flexible, the Court finds that it is a racial quota as it requires a certain fixed number of board positions to be reserved exclusively for certain minority groups,” Judge Mendez wrote.
The judge also rejected California’s attempts to preserve quotas for members of the LGBT groups classifications by simply severing the quotas for racial groups and allowing the rest of the law to stand.
He said the language within the law was “almost exclusively cast in racial and ethnic terms and figures.”
So removing the racial quota mandates would damage the law too greatly to allow it to stand and preserve the LGBT quotas, Judge Mendez said.
Further, the judge said the state had argued in court that “AB979’s main purpose is to remedy racial and ethnic discrimination,” not address LGBT concerns.
Judge Mendez granted summary judgment to the plaintiffs in the case, meaning it cannot proceed to a trial.
It remains to be seen what impact the ruling may have on other cases still pending, such as appeals over the ruling blocking and striking down SB826.