Last week, one of California’s two board diversity statutes was ruled unconstitutional when the Los Angeles Superior Court issued a 24-page order granting summary judgment in Crest v. Padilla II. No word yet whether the State of California will appeal. As noted in this Idaho Statesman article, Judge Terry Green’s reasoning was:

Judge Terry Green wrote in his decision that the state Legislature should have considered other options for achieving greater diversity on boards before mandating it. “If demographically homogeneous boards are a problem, then heterogenous boards are the immediate and obvious solution,” he wrote. “But that doesn’t mean the Legislature can skip directly to mandating heterogenous boards.”

The statute that was struck down – AB 979 – was the second of two board diversity laws enacted in California. It sought to broaden the director pool for “underrepresented communities.” Since this struck down law was patterned after the first board diversity law (SB 826), that first board diversity law might also wind up suffering the same fate given that it’s also facing a lawsuit brought by the same plaintiff – Judicial Watch – in Crest v. Padilla I. The status of that case is that we are awaiting a court decision after a bench trial recently wrapped up.

Both of these cases were brought as “taxpayer lawsuits,” charging that the State of California used taxpayer funds to establish a law that was unlawful in violation of the California Constitution. Watch this space for more…

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Photo of Broc Romanek Broc Romanek

As a strategist for the firm’s Corporate & Securities practice, Broc Romanek has a deep understanding of the regulatory and environmental, social, and governance (ESG) marketplace. Prior to joining Perkins Coie, Broc served as editor at TheCorporateCounsel.net, CompensationStandards.com, and DealLawyers.com, where he oversaw…

As a strategist for the firm’s Corporate & Securities practice, Broc Romanek has a deep understanding of the regulatory and environmental, social, and governance (ESG) marketplace. Prior to joining Perkins Coie, Broc served as editor at TheCorporateCounsel.net, CompensationStandards.com, and DealLawyers.com, where he oversaw and managed coverage on issues related to ESG, corporate governance, executive pay, deals, and market trends and analysis.

In addition to his nearly two decades of working as a journalist and publisher, Broc served as assistant general counsel at a Fortune 50 company, worked in the Office of Chief Counsel of the U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance, was a counselor to former SEC Commissioner Laura Unger, and worked in private practice. He also is the author, or co-author, of four legal treatises, and has authored several books focused on the legal industry.