Judge Weighs Challenge To California Board Quota Law

On Monday,  Los Angeles Superior Court Judge Terry Green heard arguments on opposing motions for summary judgment in a case challenging the constitutionality of AB 979.  Crest v. Padilla, L.A. Super. Ct. Case No. 20STCV37513.  Enacted in 2020, AB 979 requires publicly held domestic or foreign corporations having their principal executive offices in California to have specified minimum numbers of directors from "underrepresented communities".  Cal. Corp. Code §§ 301.4 & 2115.6.  I did not attend the hearing, but according to an article by Craig Clough, Judge Green characterized the law as a "bit arbitrary".  "Calif. Board Diversity Law Seems 'Arbitrary,' Judge Says,"  Law 360®  (March 14, 2022).  

The article also reports that Judge Green asked why Asians are included as members of an underrepresented community.  I believe that the answer lies in a letter that I wrote to Senator Chris Holden, the bill's author, on July 19, 2020.  At that time, the bill defined “Director from an underrepresented community” means an individual who self-identifies as Hispanic, or Native American.  My letter pointed out:

AB 979 would therefore have the effect of discriminating against males and non-binary people who self-identify as belonging to other racial/ethnic communities even though those communities are also underrepresented on the boards of publicly held corporations.  For example, the percentage of people who identified as Asian/Pacific Islander on Fortune 500 boards was 3.7% although the percentage of people in the United States who identify as such was 5.9%.  [footnote omitted]  Notably, AB 979 includes no legislative finings regarding the participation of Asian/Pacific Islanders on public company boards.

Nine days later, Senator Holden amended AB 979 to include Asians and Pacific Islanders within the definition of "director from an underrepresented community".

Meanwhile, Los Angeles Superior Court Judge Maureen Duffy-Lewis is expected to issuer her decision in a challenge to California's female director quota law, SB 826.  The trial in Crest v. Weber, Cal. Super. Ct. Case No. 19STCV27561, began last year and did not end until last month.