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Lawsuit Challenges CA Law About Corporate Boards

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Sacramento, CA — In 2018 California lawmakers approved a bill that requires at least one woman sitting on the board of directors for corporations based in California.

Proponents of Senate Bill 826 stated the goal was to “advance equitable gender representation on California corporate boards.” It has resulted in companies expanding boards or filling seats with women when they come open.

It was signed by former Governor Jerry Brown and took effect on December 31 of 2019. At the end of this year, the rule will expand to two women on the board if the corporation has five directors, and three women if it has six or more.

The Pacific Legal Foundation filed a lawsuit on behalf of Creighton Meland Jr., a shareholder of OSI Systems. He argues that the law unconstitutionally discriminates on the basis of sex. The lawsuit was initially thrown out by a lower court which ruled that Meland’s lawsuit had no standing. But yesterday, it was revived by the US 9th Circuit Court of Appeals. It unanimously felt that Meland has the right to sue the state.

Last September an additional bill was signed by Governor Gavin Newsom that will require public corporations based in the state to also add members of underrepresented groups to all boards, like racial minorities or members of the LGBT community. A lawsuit has also been filed against it by the non-profit conservative group Judicial Watch.