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ISS And The Unruh Civil Rights Act

Jesse Unruh was born to an impoverished immigrant couple and rose to become a legendary figure in Sacramento politics.  He is credited with the oft-heard aphorism "Money is the mother's milk of politics".  In 1959, Unruh authored a bill that enacted the "Unruh Civil Rights Act" (Stats. 1959, ch. 1866).  Although eponymously and immodestly named, the bill was not entirely novel.  In fact, the Unruh Civil Rights Act expanded California Civil Rights Statute of 1879, which was in turn based on the National Civil Rights Act of 1875 (18 Stat. 335, ch. 114).

Sections 51(b) currently prohibits discrimination by business establishments by declaring:

"All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever."

Section 52(a) imposes liability on "[w]hoever denies, aids or incites a denial, or makes any discrimination or distinction contrary to Section 51". 

Recently, Institutional Shareholder Services recently announced its 2019 Americas Proxy Voting Guidelines Updates.  One change relates to board diversity.  For companies in the Russell 3000 or S&P 1500 indices, effective for meetings on or after February 1, 2020, ISS will generally recommend a vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) at companies when there are no women on the company's board.  One cannot help but wonder whether such recommendations will constitute aiding or inciting discrimination or distinction in violation of the Unruh Civil Rights Act.

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