Appeal filed in challenge to state’s women directors law

The Pacific Legal Foundation appealed a federal judge's denial of a preliminary injunction against a California law requiring women on corporate boards.

The conservative group sued on behalf of a company shareholder, challenging SB 826, citing the Fourteenth Amendment's equal protection clause. The 2018 law requires a minimum number of women on the boards of companies headquartered in California. In December, Judge John A. Mendez wrote that even though the challenge "may ultimately prevail," the plaintiffs had not shown a high enough likelihood of success to merit a temporary injunction. Meland v. Weber, 2:19-cv-02288-JAM-AC (E.D. Cal., filed Nov. 13, 2019).

Foundation Senior Attorney Anastasia P. Boden filed the notice of appeal on Wednesday on behalf of plaintiff Creighton Meland Jr. Meland lives in Illinois but is a shareholder of OSI Systems Inc., an electronics manufacturer with headquarters in Hawthorne.

The company is not party to the case though it is out of compliance with the law. Incorporated in Delaware, OSI has one woman on its seven-member board; the law requires it to have three. Company Director Kelli Bernard is the newest member of the board, appointed in 2019 after the passage of SB 826.

The case is one of several legal challenges against SB 826 and AB 976, a 2020 California law requiring boards to include "underrepresented communities." Even some supporters of greater board diversity have said both laws are unconstitutional, but they have so far withstood challenges. The same Pacific Legal Foundation team filed another federal challenge to both laws, National Center for Public Policy Research v. Weber, 2:21-cv-02168-JAM-AC (E.D. Cal., filed Nov. 22, 2021).

Meanwhile, Los Angeles County Superior Court Judge Maureen Duffy-Lewis is hearing a bench trial challenge to the law. Crest v. Padilla, 19STCV27561 (L.A. Super. Ct., filed Aug. 6, 2019).

Testifying in that case in December, Betsy Bogart, chief of business programs with the California Secretary of State's office, said there have been no penalties imposed on companies who have not complied with SB 826. But a study that same month from the California Partners Projects found companies have added nearly 1,100 women to their boards since the law passed.