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Home / Sticht

Lawsuit challenges state law requiring more women on corporate boards

By BILL HETHERMAN

A law requiring increased membership by women on corporate boards is discriminatory and should be struck down, an attorney for three plaintiffs told a judge Wednesday, but a lawyer for the Attorney General’s Office said the law is fair and the lawsuit challenging its constitutionality should be dismissed.

Lawyer Robert Patrick Sticht, for the plaintiffs, and Supervising Deputy Attorney General Ashante Norton, on behalf of Secretary of State Shirley N. Weber, presented their final arguments to Los Angeles Superior Court Judge Maureen Duffy-Lewis, ending a non-jury trial in which testimony began in early December regarding Senate Bill 826.

Passed in 2018, the law applies to publicly held corporations with principal executive offices located in California and required them to have at least one female director on the board by the close of 2019.

Additionally, by the end of 2021, some boards were required to have additional female directors based on the size of the board.

Duffy-Lewis took the case under submission and did not say when she would rule.

The conservative judicial watchdog group Judicial Watch filed the taxpayer lawsuit in August 2019 against then-Secretary of State Alex Padilla on behalf of plaintiffs Robin Crest, Earl De Vries and Judy De Vries.

Judicial Watch argues that California’s quotas for women on corporate boards violates the California Constitution’s equal protection clause and asks the court to permanently enjoin any expenditure of taxpayer funds to implement the quotas.

Padilla was appointed to the U.S. Senate by Gov. Gavin Newsom in January 2021 to fill the vacancy created when then-Sen. Kamala Harris was elected vice president. Newsom then appointed Weber to replace Padilla.

Sticht said laws already exist banning gender discrimination and if they are not being enforced, it is up to the Legislature to do so. He also argued that if corporations want to add more women to their boards, they can increase the number of members on the board or fill vacancies with females.

However, SB 826 is the wrong way to go about solving the problem, he added.

“The statute is a mandate for a gender quota,” Sticht told the judge.

Former state Sen. Hannah-Beth Jackson, who co-authored SB 826, testified during the trial. Jackson, D-Santa Barbara, previously said that it is “disappointing that this conservative right wing group is more invested in spending thousands of dollars on a questionable lawsuit than supporting policy that improves business’ profits and boosts our economy.”

But Sticht criticized Jackson often during his final argument, saying she had no answer for some of his questions, including whether there were any gender-neutral alternatives to SB 826.

In their court papers, lawyers for the Attorney General’s Office argue that the plaintiffs cannot show that any illegal or wasteful expenditures of taxpayer money has occurred in the implementation of the law’s requirements.

They also maintain that the law addresses longstanding discrimination against women in the “secretive process of corporate board director selection on publicly held corporations in California and attains the benefits of gender diversity for the public and the economy.”

SB 826 also does not violate the California Constitution’s equal protection clause, lawyers for the Attorney General’s Office further argue in their court papers.

In her final argument, Norton recalled the testimony of defense witnesses who said that without SB 826, achieving gender equality on California’s corporate boards could take decades. She said everyone benefits from boards that reflect the hard work and achievements of women.

“Increasing women on boards leads to better corporate performance,” she said.

Without the law, male dominance will persist as current board members turn to golf buddies and others they know to join them at the top of the corporate structure.

“People tend to prefer people like themselves,” Norton said.

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.”

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