In a little over a month’s time, the Superior Court of California (the “Superior Court”) struck down both AB 979 and SB 826, California’s two board diversity statutes. SB 826 required that a public company whose principal executive offices are located in California have a certain number of female directors on its board of directors. Similarly, AB 979 required that a public company whose principal executive offices are located in California have a certain number of directors from an underrepresented community on its board of directors.
On April 1, 2022, the Superior Court granted a motion for summary judgment in favor of a group of California taxpayers represented by Judicial Watch, who sued the California Secretary of State to prevent the state from using taxpayer funds to enforce AB 979 and to have the statute declared unconstitutional. The Superior Court’s order did not provide the reasoning for its decision.
Then, on May 13, 2022, the Superior Court held that SB 826 violates the Equal Protection Clause of the California Constitution. This case was also brought by Judicial Watch on behalf of California taxpayers. The Superior Court explained in its decision that “[t]he State must have a strong basis in evidence to conclude that remedial action is necessary before it embarks on a program to remedy discrimination, and the discrimination cannot merely be conceded.” The Superior Court decided that in this case, “[t]here is no Compelling Governmental Interest in remedying discrimination in the board selection process because neither the Legislature nor Defendant could identify any specific, purposeful, intentional and unlawful discrimination to be remedied.”
As a result of the Superior Court’s rulings, the statutes are both presently enjoined, but the state of California may appeal the decisions.