Judicial Watch Sues California to Prevent Enforcement of Race, Ethnicity, Sexual Preference and Transgender Status Quotas for Corporate Boards of Directors

(Washington, DC) – Judicial Watch announced today that it filed a lawsuit in the Superior Court of the State of California County of Los Angeles on behalf of three California taxpayers to prevent California from enforcing Assembly Bill 979 (AB 979), which Governor Gavin Newsom signed into law September 30, 2020. The bill requires that boards of directors of California-based, publicly held domestic or foreign corporations satisfy racial, ethnicity, sexual preference and transgender status quotas by the end of the 2021 calendar year. A Senate Floor Analysis says the bill draws distinctions based on race and ethnicity, and therefore, it is “suspect,” and that “the existence of general societal discrimination will not ordinarily satisfy courts.” Judicial Watch filed a lawsuit a few hours after Governor Newsom signed the new quota law.  

AB 979 requires publicly held corporations to have a minimum of one director from an “underrepresented community” on its board by the end of the 2021 calendar year and up to three “underrepresented-community” board members by the end of the 2022 calendar year, depending on the size of the board. The bill defines “director from an underrepresented community” to mean “an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.” 

Judicial Watch filed the lawsuit (Robin Crest, et al. v. Alex Padilla, in his official capacity as Secretary of State of the State of California (No.20ST-CV-37513)) the same day Governor Newsom signed the bill in order to prevent the Secretary of State’s office from expending taxpayer funds and taxpayer-financed resources to implement the law and/or ensure compliance with AB 979’s racial, ethnic, sexual preference and transgender-based quotas. According to the Assembly Appropriations Committee AB 979 “will result in ongoing costs in the hundreds of thousands of dollars to gather demographic information and compile a report on this data on its internet website.” 

In its complaint Judicial Watch argues:  

• Any expenditure of taxpayer funds or taxpayer-financed resources on AB 979 is illegal under the California Constitution.  The legislation’s requirement that certain corporations appoint a specific number of directors based upon race, ethnicity, sexual preference, and transgender status is immediately suspect and presumptively invalid and triggers strict scrutiny review by the court. 

• Because it classifies directors by virtue of their race, ethnicity, sexual preference, or transgender status, AB 979 can only be justified by a compelling governmental interest, and its use of race and ethnicity must be narrowly tailored to serve that compelling interest. 
• As California cannot make these difficult showings, AB 979 is unconstitutional and any expenditure of taxpayer funds or taxpayer-financed resources in furtherance of, ensuring compliance with, or otherwise effectuating the racial, ethnicity, sexual preference, and transgender quotas required by AB 979 is illegal.      

The Floor Analysis produced by the California Senate during deliberation on the bill identified “potential constitutional issues posed by” AB 979. It described AB 979 as “requiring certain corporations to appoint a certain number of directors who self-identify as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaskan Native” and noted that, under the California Constitution, “a statute that draws a distinction based upon race or ethnicity in this fashion – whether remedial or punitive in intent – is suspect and only passes constitutional muster if it can meet the strict scrutiny test: that the statute is narrowly drawn to meet a compelling government interest.”  The analysis also stated, “the existence of general societal discrimination will not ordinarily satisfy the courts.” 

Judicial Watch asks the court to halt the quota law:  

A judgment declaring any and all expenditures of taxpayer funds and taxpayer-financed resources in furtherance of, ensuring compliance with, or otherwise effectuating the racial, ethnicity, sexual preference, and transgender quotas required by AB 979 to be illegal; and 

An injunction permanently prohibiting Defendant from expending or causing the expenditure of taxpayer funds and taxpayer-financed resources in furtherance of, ensuring compliance with, or otherwise effectuating the racial, ethnicity, sexual preference, and transgender quotas required by AB 979. 

In a related case, Judicial Watch is prosecuting a taxpayer lawsuit that challenges California’s gender quotas (Crest et al. v. Padilla, (No.19ST-CV-27561)). In June, in a major development, the court held that Judicial Watch’s clients have standing to sue under state law and Judicial Watch attorneys are now in discovery, which could involve deposition testimony of various California officials.

“California’s government has a penchant for quotas that are brazenly unconstitutional,” said Judicial Watch President Tom Fitton. “Gender quotas and now new quotas for numerous other groups for corporate boards are slaps in the face to the core American value of equal protection under the law. While California skirts bankruptcy and burns up due to fiscal abandon, its leftist political leadership would waste tax dollars to implement illegal and divisive quotas.” 

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