In addition to suing over the NASDAQ board diversity listing standard, the Alliance for Fair Board Recruitment is also the lead plaintiff in a suit challenging the California board of director racial and gender quota laws.
Unlike an earlier court challenges, this lawsuit takes on both SB 826 and AB 979. These bills impose quotas as to the number of female directors (SB 826) and directors from underrepresented communities (AB 979) on the boards of directors of publicly held corporations having their principal executive offices in California.
This new challenge differs from the others because it takes on both requirements and argues that both quota requirements are contrary to the "internal affairs doctrine". The plaintiff asserts:
California's race and gender quota laws expressly apply "to the exclusion" of the laws of the state of incorporation. Cal. Corp. Code §§ 2115.5(a), 2115.6(a). In other words, these board laws assert that they override other states' laws governing corporations incorporated in their own states. Therefore, California's "diversity" laws violate the internal affairs doctrine.
As regular readers know, I do not claim expertise to opine on the equal protection issues raised by these statutes, but I do believe that the statutes--as applied to companies incorporated outside of California--are unconstitutional under the internal affairs doctrine.
