California Corporate Diversity Law Ruled Unconstitutional

By ROBERT JABLON, Associated Press

LOS ANGELES (AP) – A Los Angeles judge ruled Friday that the California Landmark Act, which requires companies to diversify their boards with members of certain racial, ethnic or LGBT groups, is unconstitutional.

The short verdict granted a summary verdict to Judicial Watch, a conservative legal group that requested a permanent injunction against the measure, which was signed into law last year. The judgment did not explain the judge’s reasoning.

The measure requires corporate boards of listed companies headquartered in California to have a member from an “under-represented community,” including LGBT, black, Latino, Asian, Native American or Pacific Islanders.

The trial claimed that it violated the state’s constitutional clause on equal protection.

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The decision “unconstitutionally declared one of the most obvious and significant attacks of the modern era against constitutional prohibitions on discrimination,” Judicial Watch President Tom Fitton said in a statement.

Messages seeking comment from the state were not immediately returned on Friday night.

However, in its lawsuits, the state argued that the measure did not “discriminate or favor any individual or group on the basis of race, sex, skin color, ethnicity or national origin in public service. Employment, public education or public procurement.”

However, no companies have been fined, and the state claimed that no tax money had actually been used to implement the measure.

The law requires companies to include at least one member of an under-represented group on their boards by December 31 last year, either by adding a seat or filling a vacancy. By 31 December this year, each company must include a minimum number of such members based on the total size of the board.

A “Diversity in Boards” report issued in March by the Foreign Minister found that about 300 out of about 700 companies had followed. However, half of the companies did not submit the mandatory disclosure statement.

A related trial from Judicial Watch in Los Angeles is challenging another state law that requires a female director on corporate boards.

The three-year-old law was on shaky ground from the beginning with a legislative analysis that said it could be difficult to defend and the then government. Jerry Brown said he wrote it even though it could be overturned by a court.

The state defended the law as constitutional, saying it was necessary to reverse a culture of discrimination that favored men and was introduced only after other measures failed.

Associated Press writer Brian Melley in Los Angeles contributed to this story.

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