In a landmark decision on May 17, a California district court blocked a state law mandating racial quotas on corporate boards as it violated the U.S. Constitution.
The California law, AB979, required that a minimum number of people from “designated racial, ethnic, and LGBTQ backgrounds” have a seat on corporate boards.
But the court ruling stated (pdf) that the law “is unconstitutional on its face and Plaintiff is entitled to summary judgment in its favor as a matter of law.” The plaintiff in the case was the Alliance for Fair Board Recruitment.
“The Court made clear that California’s attempts at racial engineering are per se unlawful,” Michael Bushbacher, a partner at Boyden Gray, which represented the plaintiff, said. “The Constitution prohibits diversity mandates in every circumstance.
“The Court also put private companies on notice by concluding that AB979 violates the Civil Rights Act of 1866, which applies to both state and private discrimination,” Bushbacher said. “Woke corporations that impose diversity mandates on their own are thus just as liable.”
“Racial diversity quotas are not only unconstitutional, they are immoral,” Edward Blum, director of the Alliance for Fair Board Recruitment, said. “Businesses should appoint board members based on their merit, not on their skin color.”
Boyden Gray recently also filed a lawsuit in the U.S. Fifth Circuit Court of Appeals against the Securities and Exchange Commission (SEC), charging that the SEC assisted Kroger, a grocery chain, in imposing viewpoint discrimination on employees. In addition, they filed a lawsuit against the Nasdaq for imposing racial board quotas on companies, similar to what California has done.
Among the “underrepresented groups” that would be favored by the California law were “Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native . . . gay, lesbian, bisexual, or transgender.” The number of board seats they must hold varied according to the size of the company, but corporations that failed to comply were subject to a $100,000 fine for the first violation and $300,000 for any subsequent violation.
The plaintiffs argued that this law violated, among other things, the Equal Protection Clause of the Fourteenth Amendment. California conceded that the law granted race-based favoritism but argued that it should be allowed to stand because it is aimed at remedying past discrimination.
The court, however, found that “the Supreme Court has rejected racial and ethnic quotas and has declared them ‘facially invalid.’”
“Usually, when there’s an inquiry into whether some race based thing is constitutional under the 14th Amendment, the court will do what’s called strict scrutiny; it will look at whether there’s a compelling state interest and whether the means to achieve that interest are narrowly tailored,” Bushbacher told The Epoch Times. “One of the things that we argued, and what the court ended up going with, is that quotas are just per se unlawful. You can’t ever do them. There’s no amount of evidence, there’s no amount of anything that you could do to justify them.”
This ruling will likely set a precedent, not only for government race laws but also for corporations that set racial quotas.
