A federal appeals court on Monday revived a lawsuit that challenged California’s law requiring women to be placed in hundreds of corporate boardrooms.
In a unanimous ruling, three judges of the U.S. 9th Circuit Court of Appeals said a shareholder has the legal right to sue over the 2018 law, the Los Angeles Times reported.
The law required publicly owned corporations that are based in California to have at least one female director on their boards by 2019. The number increases to two or three women by the end of this year, depending on the size of the board.
A lawsuit filed on behalf of a shareholder in one business, OSI Systems, challenged the law on grounds that it forced him to unconstitutionally discriminate on the basis of sex.
A lower court threw out the suit, saying that the shareholder, Creighton Meland Jr., hadn’t been injured by the law and therefore didn’t have a legal right, or standing, to challenge it.
However, the appeals court said the law was “coercive” and Meland could plausibly argue that he was injured by it. The ruling said shareholders typically elect corporate directors.
Anastasia Boden, a senior attorney at Pacific Legal Foundation, said the ruling confirmed that the law was unconstitutional.
“It’s patronizing” as well, said Boden, who argued the case on behalf of Meland. “It perpetuates the myth that women cannot make it to the boardroom without government help.”
The law also is being challenged by another conservative legal group, Judicial Watch. That group also sued last year to block California’s first-in-the-nation law requiring corporations to have directors from racial or sexual minorities on their boards.
The new measure cited statistics showing few of more than 660 public corporations headquartered in California had Blacks or Latinos on their boards.
Gov. Gavin Newsom, who signed the bill, said it was crucial to fighting racial injustice by giving minorities “seats at the table” of corporate power.