Secretary of State appeals ruling in boardroom diversity case

California Secretary of State Shirley N. Weber, Ph.D., filed an appeal Monday after a judge’s decision that would roll back state efforts to remedy longstanding discrimination against ethnic and racial minorities and LGBT persons in the corporate board selection process.

“Once again, I am deeply disappointed in the court’s decision to roll back a policy just as it begins to break down barriers to the boardroom for qualified Californians from these communities,” Weber said. “In July 2020, only 16 percent of California corporations had at least one Black director, but by March 31, 2021, after Assembly Bill 979’s passage, that number increased to 27 percent. Since the law went into effect, the number of boards with at least one Latino director increased by 4 percentage points, and boards with at least one Asian director increased by 9 percentage points.”

“This policy is working. To halt implementation now would move the state backwards, so we are pursuing an appeal to the judge’s decision.”

Late last week, Los Angeles County Superior Court Judge Terry Green entered judgment in Crest v. Padilla in favor of three taxpayers seeking to prevent the Secretary of State from continuing to implement AB 979, legislation that requires publicly held corporations headquartered in California to have a minimum number of directors from underrepresented communities on their boards.

“Particularly disturbing is that this case was not brought by corporations to avoid compliance, a fact acknowledged by Judge Green. Instead, this lawsuit seems to reflect hostility in certain quarters against remedying longstanding discrimination. The court’s decision in this case perpetuates an injustice that has kept boardrooms shut and locked to qualified individuals from underrepresented communities.”

Another judge ruled last month to prevent the Secretary of State from continuing to implement similar legislation that had significantly expanded access to corporate boards for women. Secretary Weber has also moved to appeal that decision.

Approximately one quarter of public companies headquartered in California failed to include any racially or ethnically diverse directors despite a qualified talent pool of candidates from underrepresented communities, according to a report by the Latino Corporate Directors Association.