Law requiring women on boards is condescending, unconstitutional, lawsuit says

A California law requiring women on corporate boards violates the equal protection clause of the 14th Amendment, according to a suit filed by the Pacific Legal Foundation.

"This law is built on the condescending belief that women aren't capable of getting into the boardroom unless the government opens the door for them," attorney Anastasia P. Boden said in a news release Tuesday.

The legal challenge is the second to be filed to stop the law, SB 826, signed in 2018. The deadline for compliance is the end of this year. Meland v. Padilla, 19AT01066 (E.D. Cal., filed Nov. 12, 2019).

The first suit was filed in August by another conservative legal organization, Judicial Watch. Crest v. Padilla, 19STCV27561 (L.A. Super. Ct., filed Aug. 6, 2019).

When she proposed the law, Sen. Hannah-Beth Jackson, D-Santa Barbara, said it would help increase equality and improve corporate performance. Jackson proclaimed it would help shatter the "glass ceiling" and improve companies' financial performance.

Boden had a different take in her complaint.

"The law is not only deeply patronizing to women, it is also plainly unconstitutional," Boden wrote. "As the 9th Circuit has observed, 'The notion that women need help in every business and profession is as pernicious and offensive as its converse, that women ought to be excluded from all enterprises because their place is in the home."' Associated General Contractors of California, Inc. v. City and County of San Francisco, 813 F.2d 922, 941 (9th Cir. 1987).

The law applies to publicly-traded companies headquartered or incorporated in California. It was written with a one-year delay and goes into effect on Jan. 1.

In 2021, the requirement will jump from one woman on a board to two for companies with five or more board members and three women for boards of six or larger. These requirements are backed up by a $100,000 fine for companies that fail to report or comply, jumping to $300,000 for repeat violations.

The named plaintiff is a former corporate attorney who lives in Illinois but is a shareholder in OSI Systems Inc.. The Hawthorne-based company, which makes medical machines and metal detectors, "does not currently have the requisite number of women on its board," according to the complaint.

The complaint cites the "potential flaws" and "serious legal concerns" Gov. Jerry Brown pointed out when he signed the bill. It goes on to claim the law violates the rights of shareholders while also perpetuating "sex-based discrimination."

A study put out last month by researchers at Clemson University and the University of Arizona found 28% of California companies affected by the law still need to add women to their boards. Without new board members, 88% of the 602 companies evaluated would be short at least one woman when the stricter requirements take effect in 2021.

A few European countries, notably France, have similar laws. Several state legislatures have also evaluated the idea. Illinois' governor signed a law in August requiring companies to report the gender and race of board members. It was designed to encourage firms to name more women and minorities but stopped short of a requirement.

The Judicial Watch complaint was filed on behalf of three California taxpayers. It cites a state law that bars public officials from spending state resources enforcing unconstitutional laws.

Jackson's office did not reply to a call and email seeking comment by press time.