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California Law Requiring Women on Public Company Boards Struck Down

BusinessCalifornia Law Requiring Women on Public Company Boards Struck Down

A corporate boardroomA corporate boardroom. Photo via Pixabay

A Superior Court judge in Los Angeles has ruled unconstitutional California’s law requiring publicly held companies to include women on their boards, dealing a blow to the state’s push to diversify corporate leadership.

Judge Maureen Duffy-Lewis issued the decision on Friday, three months after she heard final arguments in a lengthy non-jury trial in a lawsuit argued by the conservative legal group Judicial Watch.

Former California State Sen. Hannah-Beth Jackson, who was co-author of Senate Bill 826 and testified in the trial, said she believes the state will appeal the verdict and prevail.

Senate President pro Tempore Toni Atkins, the bill’s other author, called the ruling “disheartening” and pointed to data showing that companies with female board members are more successful.

“More women on corporate boards means better decisions and businesses that outperform the competition — that’s a studied, proven fact,” Atkins said.

Three taxpayers backed by Judicial Watch challenged the law in 2019, saying it amounted to sex discrimination in violation of the state’s constitution and would harm California taxpayers.

California’s secretary of state had defended the law at trial, arguing that the state has a compelling interest in gender diversity on boards and that the law was tailored to address a historic lack of women on boards.

A spokesperson for the California Secretary of State Shirley Weber said her office is reviewing the judgment

Judicial Watch President Tom Fitton said in a statement that “The radical Left’s unprecedented attack on anti-discrimination law has suffered another stinging defeat.”

Passed in 2018, the statute required publicly held companies based in California to have up to three women directors, and allowed the secretary of state to issue fines of up to $300,000 per violation. No fines have been levied.

When he signed SB 826 into law in 2018, then-Gov. Jerry Brown noted that there have been “numerous objections to this bill and serious legal concerns that have been raised,” adding that he would not “minimize the potential flaws that indeed may prove fatal to its ultimate implementation.”

Judicial Watch recently won another taxpayer challenge to a similar California law requiring boards to include directors who self-identify as a member of an “underrepresented community,” which includes Asian, Black, Latino, Native American, and Pacific Islander individuals, as well as those who are gay, lesbian, bisexual or transgender.

Reuters and City News Service contributed to this article.

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