Not surprisingly based on the text of the law, as well as last month’s ruling on the unconstitutionality of California’s board “underrepresented community” representation quota law (Assembly Bill No. 979) (we reported on here), last Friday, the Los Angeles Superior Court held in Crest v. Padilla (LA Super. Ct. Case No. 19STCV27561) that California’s board diversity quota law – Senate Bill No. 826 - also violates the Equal Protection Clause of the California Constitution. The plaintiff, Judicial Watch, was the same party that was granted summary judgment in the case that challenged California’s Assembly Bill No. 979.
Media sources indicate that the California Secretary of State has not yet decide whether to appeal the decisions. Law.com advises companies with board diversity quota policies to anticipate potential challenges from activist investors and other groups that use these decisions as a basis for attacking corporate policies that rely on quotas, as opposed to more fluid guidelines or principles.
See these posts from Cooley and Allen Matkins; these articles from Fortune and the WSJ; and additional resources on our Board Diversity page.