By Levi Sumagaysay
The Mercury News
WWR Article Summary (tl;dr) Judicial Watch filed the lawsuit against the new law which requires publicly traded California companies to have at least one woman on their boards by the end of this year. Companies that don’t comply will be fined $100,000 for their first violation.
The Mercury News
California’s first-in-the-nation law mandating women on boards of publicly held companies is facing what appears to be its first legal challenge.
Judicial Watch, a Washington-based conservative activist group, said in a lawsuit filed this week on behalf of three California taxpayers that spending taxpayer money enforcing the law is illegal under the California constitution.
When then-Gov. Jerry Brown signed SB 826 into law last year, he noted in a letter to the state senate that “There have been numerous objections to this bill and serious legal concerns have been raised.”
In its lawsuit, Judicial Watch cited Brown’s words, plus an Assembly Floor Analysis that predicted the law would likely be challenged on equal-protection grounds.
“California’s gender quota law is brazenly unconstitutional,” said Judicial Watch President Tom Fitton in a statement Friday.
The group is suing California Secretary of State Alex Padilla, whose office is responsible for enforcing the law.
“We support the underlying goal of SB 826 to create an equitable economy and inclusive California,” a spokeswoman for Padilla said Friday. “We will review the lawsuit and will respond in court.”
Under the law, all publicly traded California companies must have at least one woman on their boards by the end of this year. By the end of 2021, the law calls for at least two women on boards with five directors, and at least three women on boards with at least six directors. Companies that don’t comply will be fined $100,000 for their first violation.
Sen. Hannah-Beth Jackson, D-Santa Barbara, co-wrote the bill with Sen. Toni Atkins, D-San Diego. A spokeswoman for Jackson said this is the first lawsuit over the new law that her office is aware of.
“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,” Jackson said in an email Friday.
“While the courts consider this challenge, many companies have already voluntarily complied. Just last month, the last all-male board of the S&P 500 added a woman to its ranks, showing that diversity is within our grasp and that women are highly qualified and eager to step up.”
The lawsuit states that the California secretary of state has identified 537 out of 761 public companies that must still comply with the law. However, the list Padilla’s office released last month was based on information in company filings with the Securities and Exchange Commission only up to June 30. Other companies have yet to file.
Most well-known tech companies are in compliance. This news organization’s look at the top 150 Silicon Valley companies by revenue showed that as of July 1, only a handful of companies have yet to add a woman to their board of directors.
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