Suit claims law requiring companies to have a women director is unconstitutional

A Los Angeles County Superior Court lawsuit seeks to halt SB 826, the 2018 law signed by then-Gov. Jerry Brown that requires all publicly-traded companies headquartered in California to have one female board director by year's end.

Judicial Watch, a Washington, D.C.-based nonprofit, filed the suit on behalf of plaintiffs Robin Crest, Earl De Vries and Judy De Vries. The trio allege the law violates the state Constitution. Crest v. Padilla, 19STCV27561 (L.A. Super. Ct., filed Aug. 6, 2019).

"California's gender quota law is brazenly unconstitutional," Judicial Watch President Tom Fitton said in a statement Friday. "Judicial Watch's California taxpayer clients are stepping up to make sure that California's Constitution, which prohibits sex discrimination, is upheld."

In a statement, a spokesperson for Secretary of State Alex Padilla's office said they were reviewing the lawsuit. "We support the underlying good of SB 826 to create an equitable economy and an inclusive California," the spokesperson said. The secretary's office handles implementing the law and compliance.

In the suit, the group alleges "any expenditure of taxpayer funds or taxpayer-financed resources" toward implementing SB 826 violates the state Constitution by creating a quota system that "employs express gender classifications."

The law faced similar scrutiny when it was passed last October. In establishing a mandate for female representation, it undermined long-established diversity programs, such as expanding boards and search pools, the suit claims.

But in the wake of the #MeToo Movement and statistics highlighting female underrepresentation at the board level, the bill gained support.

"Even at the time Governor Brown signed the law, there was concern because, in essence, creates a quota system and the [U.S.] Supreme Court has made it clear that quotas are constitutionally suspect," said Wynter L. Deagle, managing partner at Troutman Sanders in San Diego and an expert in regulatory enforcement not involved in the matter.

In addition to the 2019 mandate, all California public companies must have at least one female director on boards of four of fewer members, two on five-member boards, and at least three on boards of six or more by 2021, according to the law.