We discussed a new California law which requires certain California corporations to include a certain number of women on their boards of directors here. In short, this rule requires those publicly traded corporations which are based in California to have at least one female director on their boards by the end of 2019. In the following years, additional females will be required for some corporations based on the size of their boards.
As we also discussed in our previous article that an equal protection challenge to this new law seemed inevitable. On August 6, 2019, this inevitable challenge was filed in the County of Los Angeles. The lawsuit challenges the female quota rule on the basis that it violates the California constitutional provision providing for equal protection. Under this provision, all persons must be treated equally, regardless of any classifications (such as gender).
The lawsuit argues that by calling for a mandatory quota of women on the corporations’ boards, the genders are not being treated equally. Opponents of this requirement argued during the previous legislative session that potential board members would be assessed and chosen not on their merits, but instead on the basis of their gender. This, according to the lawsuit, is the type of treatment the equal protection clause seeks to protect against.
The complaint further states that because the rule classifies persons on the basis of their gender, it must be subject to strict scrutiny – the highest level of review in these types of challenges. In order to defeat this lawsuit and continue implementing the new rule, California will need to show that the rule is justified by a compelling government interest, and that the rule’s use of gender classifications is narrowly tailored to serve that compelling interest.
When this rule was signed into law almost one year ago, then-Governor Brown stated “serious legal concerns have been raised” regarding the rule, and the potential that it was not compliant with the California Constitution. These legal concerns are now being brought to light as the rule is challenged in a court of law. Because this rule provides looming deadlines for those corporations subject to the rule, this case will likely be watched by many.