Alliance for Fair Board Recruitment v. Weber ( 2023 )

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 EASTERN DISTRICT OF CALIFORNIA 7 8 ALLIANCE FOR FAIR BOARD No. 2:21-cv-01951-JAM-AC RECRUITMENT, 9 ORDER GRANTING PLAINTIFF’S Plaintiff, MOTION FOR SUMMARY JUDGMENT 10 v. 11 SHIRLEY N. WEBER, in her 12 official capacity as Secretary of State of the 13 State of California, 14 Defendant. 15 16 Before the Court is the Alliance for Fair Board 17 Recruitment’s (“Plaintiff”) motion for summary judgment against 18 Shirley N. Weber (“Defendant”), in her official capacity as 19 California’s Secretary of State. See Mot. for Summary Judgment 20 (“Mot”), ECF No. 88. Plaintiff alleges that California Assembly 21 Bill No. 979, which, in part, requires publicly held corporations 22 located in California to have a minimum number of directors from 23 designated underrepresented racial, ethnic and LGBTQ backgrounds, 24 violates the Equal Protection Clause and 42 U.S.C. § 1981. Id. 25 at 9-10. Defendant opposes the motion, asserting that AB 979 26 satisfies strict scrutiny or, in the alternative, should have its 27 unconstitutional provisions severed from the rest of the bill. 28 See Opp’n, ECF No. 114. Plaintiff replied. See Reply, ECF 1 No. 122. For the reasons set forth below, this Court GRANTS 2 Plaintiff’s motion.1 3 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND 4 On September 30, 2020, AB 979 was passed into law, adding 5 California Corporations Code Sections 301.4 and 2115.6. Compl., 6 ECF No. 1, ¶ 38. Proponents of the bill claim that it is 7 intended to address corporate discrimination against 8 underrepresented communities. Opp’n at 1. The legislation 9 required public corporations headquartered in California to have 10 a minimum number of directors from select identities that are 11 underrepresented on corporate boards by December 31, 2022. Id. 12 Specifically, the bill outlined underrepresented groups as those 13 who identify as “Black, African American, Hispanic, Latino, 14 Asian, Pacific Islander, Native American, Native Hawaiian, or 15 Alaska Native . . . gay, lesbian, bisexual, or transgender.” 16 Cal. Corp. Code § 301.4(e). The minimum number of directors 17 required by AB 979 depends on the size of the corporation’s 18 board, ranging from a minimum of one to three. Cal. Corp. Code 19 § 301.4(b). Corporations that fail to comply with the statute 20 are subject to a $100,000 fine for an initial violation and 21 $300,000 for any subsequent violation. Cal. Corp. Code 22 § 301.4(d). The law contains no sunset provision or expiration 23 date. 24 Plaintiff, a non-profit membership organization composed of 25 individuals who do not self-identify into one of AB 979’s 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled 28 for April 25, 2023. 1 underrepresented groups, filed suit against Defendant on July 12, 2 2021. See Compl. With respect to AB 979, Plaintiff alleged 3 violations of (1) the Equal Protection Clause of the Fourteenth 4 Amendment, (2) 42 U.S.C. § 1981, and (3) the Internal Affairs 5 Doctrine. Id. At a hearing on Defendant’s motion to dismiss the 6 complaint, the Court dismissed Plaintiff’s Internal Affairs 7 Doctrine claim and permitted the remaining claims against AB 979 8 to proceed. Mot. Hearing, ECF No. 70. On March 30, 2022, 9 Plaintiff filed the operative motion for summary judgment, 10 alleging that AB 979 constitutes an unconstitutional racial quota 11 in violation of the Equal Protection Clause and 42 U.S.C. § 1981. 12 Mot. at 9-10. 13 II. OPINION 14 A. Request for Judicial Notice 15 Plaintiff asks the Court to take judicial notice of sixty- 16 three documents. See Req. for Judicial Notice (“RJN”), ECF 17 No. 115. 18 Under Federal Rule of Evidence 201, a district court may 19 take judicial notice of a fact that is “not subject to reasonable 20 dispute because it can be accurately and readily determined from 21 sources whose accuracy cannot reasonably be questioned.” Fed. R. 22 Evid. 201(b)(2). A court may therefore take judicial notice of 23 court filings and other matters of public record. Reyn's Pasta 24 Bella LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 25 2006). 26 The Court grants Plaintiff’s request for judicial notice for 27 all requested documents pursuant to Rule 201. 28 /// 1 B. Legal Standard 2 Summary judgment is proper “if the pleadings, depositions, 3 answers to interrogatories, and admissions on file, together with 4 affidavits, if any, show that there is no genuine issue of 5 material fact and that the moving party is entitled to judgment 6 as a matter of law.” Fed. R. Civ. P. 56(c). The moving party 7 bears the initial burden of demonstrating the absence of a 8 genuine issue of material fact for trial. Anderson v. Liberty 9 Lobby, Inc., 447 U.S. 242, 248–49 (1986). If the moving party 10 meets its burden, the burden of production then shifts so that 11 “the non-moving party must set forth, by affidavit or as 12 otherwise provided in Rule 56, ‘specific facts showing that there 13 is a genuine issue for trial.’” T.W. Elec. Serv., Inc. v. 14 Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th 15 Cir.1987). The Court must view the facts and draw inferences in 16 the manner most favorable to the non-moving party. United States 17 v. Diebold, Inc., 369 U.S. 654, 655 (1962). 18 C. Analysis 19 1. Claim One: Equal Protection Clause 20 a. Facial Challenge 21 Plaintiff contends that AB 979 must be invalidated because 22 it is unconstitutional on its face. Mot. at 10-12. Plaintiff 23 states that Defendant concedes that the bill imposes racial 24 classifications and requires covered corporations to have a set 25 minimum number of directors from a select racial and ethnic pool, 26 which constitutes a race-based quota despite Defendant’s semantic 27 argument that it only sets a “flexible floor” for diversity. Id. 28 at 10-11. Plaintiff argues that such quotas are per se 1 unconstitutional according to established Supreme Court 2 precedent. Id. at 11-12. 3 Defendant concedes that AB 979 constitutes a racial 4 classification but argues that it is permissible because it is 5 aimed at remedying past discrimination. Opp’n at 22. Defendant 6 also claims that AB 979 does not create preferred racial and 7 ethnic classes because no individual is insulated from 8 competition with others and each candidate must still go through 9 an individualized consideration process. Id. Furthermore, AB 10 979 expressly permits corporate boards to expand to accommodate 11 as many candidates as they wish so no director or director 12 candidate not included in one of the bill’s preferred groups 13 would be forced to lose their board position. Id. 14 The Court finds that Plaintiff’s facial challenge to AB 979 15 must be affirmed. The Supreme Court defines a quota as “a 16 program in which a certain fixed number or proportion of 17 opportunities are ‘reserved exclusively for certain minority 18 groups.’” Grutter v. Bollinger, 539 U.S. 306, 335 (2003). The 19 Supreme Court has rejected racial and ethnic quotas and has 20 declared them “facially invalid.” Regents of Univ. of California 21 v. Bakke, 438 U.S. 265, 307 (1978). Depending on the size of the 22 covered corporation, AB 979 requires corporate boards to have, at 23 minimum, one or three board members who self-identify with select 24 racial and ethnic groups. Despite Defendant’s attempt to 25 semantically cast this requirement as flexible, the Court finds 26 that it is a racial quota as it requires a certain fixed number 27 of board positions to be reserved exclusively for certain 28 minority groups; in this case, those who identify as “Black, 1 African American, Hispanic, Latino, Asian, Pacific Islander, 2 Native American, Native Hawaiian, or Alaska Native.” Cal. Corp. 3 Code § 301.4(e). In the absence of a genuine issue of material 4 fact, the Court finds that AB 979 is unconstitutional on its face 5 and Plaintiff is entitled to summary judgment in its favor as a 6 matter of law. 7 b. Strict Scrutiny 8 The Court does not reach the parties’ strict scrutiny 9 arguments because the facial challenge to AB 979 is dispositive. 10 2. Claim Two: 42 U.S.C. § 1981 11 The Supreme Court has stated that a violation of the Equal 12 Protection Clause of the Fourteenth Amendment also constitutes a 13 violation of § 1981. Gratz v. Bollinger, 539 U.S. 244, 276 n.23 14 (2003). In light of the Court’s grant of summary judgment in 15 Plaintiff’s favor on its Equal Protection challenge to AB 979, 16 the Court, accordingly, finds that Plaintiff is entitled to 17 summary judgment in its favor on this count as a matter of law. 18 3. Severability 19 Defendant asks the Court to sever AB 979 to exclude the 20 particular groups whose inclusion violates the Equal Protection 21 Clause. Opp’n at 24-25. Defendant argues that severing 22 individual groups will not adversely affect the meaning of 23 “underrepresented communities” or AB 979’s basic operation. Id. 24 at 25. Plaintiff responds that severance would be inappropriate 25 in this case and notes that AB 979 does not include a 26 severability clause. Reply at 14-15. The Court agrees. 27 When a state statute faces a constitutional challenge, the 28 Court’s severability analysis is guided by state law. Costco eee nme ee ee OIE OI IEE IEE IGE INGE! IIE 1 Wholesale Corp. v. Maleng, 522 F.3d 874, 886 (9th Cir. 2008). 2 Under California law, severance is proper if (1) severance will 3 not affect the wording or coherence of the remainder of the 4 statute; (2) the remainder of the statute “is complete in 5 itself,” and (3) the legislature would have adopted the remainder 6 of the statute “had it foreseen the partial invalidation of the 7 statute.” Cal. Redev. Ass’n v. Matosantos, 53 Cal. 4th 231, 270- 8 71 (2011). ‘The Court finds that removing AB 979’s racial and 9 ethnic classifications would adversely affect the coherence of 10 the remaining provision regarding those who identify as gay, 11 lesbian, bisexual, or transgender because the statute’s language 12 is almost exclusively cast in racial and ethnic terms and 13 figures. Also, the Court finds that (1) the language of the 14 statute, (2) Defendant’s opposition brief, which argues that AB 15 979’s main purpose is to remedy racial and ethnic discrimination, 16 and (3) the lack of a severability clause collectively indicate 17 that the legislature would not have adopted the remainder of AB 18 979 had it foreseen its partial invalidation. Therefore, the 19 | Court declines to sever AB 979, 20 Til. ORDER 21 For the reasons set forth above, this Court GRANTS 22 Plaintiff’s motion for summary judgment. 23 IT IS SO ORDERED. 24 Dated: May 15, 2023 25 : cp, JOHN A. MENDEZ 27 SENIOR UNITED*STATES DISTRICT JUDGE 28