JUNE 22, 2021

Corporate governance debates continue to test how far California can go in using state law to change representation at the top of major companies. The revived challenge shows the legal tension between diversity mandates and equal-protection claims.

Bay City News Reported:

Federal Appeals Court Reinstates Challenge To Women-On-Boards Law”

“Studies have shown that it will take decades, as many as 40 or 50 years, to achieve gender parity among directors.”

The California Legislature made this finding in 2018 to justify taking proactive measures through legislation to seat women on the boards of public companies headquartered in California.

On Monday, the U.S. 9th Circuit Court of Appeals in San Francisco reinstated a lawsuit that argues that those measures illegally discriminate on the basis of sex and must be scrapped.

Under Senate Bill 826, enacted in 2018, public companies with principal executive offices in California had to have a female on their board of directors by the end of 2019.

The California Secretary of State was given the power to fine corporations that did not comply, up to $100,000 for a first offense and $300,000 for subsequent offenses.

Creighton Meland Jr. is a shareholder of OSI Systems Inc., a public company incorporated in Delaware and headquartered in California.

In November 2019, he brought suit against the secretary in U.S. District Court for the Eastern District of California, alleging that SB 826 discriminated on the basis of sex.

According to his complaint, “The law is not only deeply patronizing to women, it is also plainly unconstitutional.”

The district court did not reach that issue, finding that Meland had no “standing” to sue because he was not discriminated against and would not suffer any penalty if the corporation was non-compliant. In the district court’s view, any penalty would be imposed on OSI and therefore Meland’s claim was simply derivative of the company’s claim.

Federal courts — unlike state courts — are courts of limited jurisdiction, and one of those limitations is the U.S. Constitution’s mandate that there must be a live “case or controversy” between the parties.

That means, among other things, that to sue in the federal system, a plaintiff must plausibly allege that he or she has suffered an actual injury. A generalized concern about a law or the conduct of a defendant is not enough to establish standing; the plaintiff has to have skin in the game.

Meland appealed the dismissal to the U.S. Court of Appeals for the 9th Circuit.

Women were heavily represented in the appellate proceedings.

Anastasia P. Boden of the Pacific Legal Foundation argued on behalf of Meland, and Lara Haddad from the state attorney general’s office argued on behalf of the secretary.

Two of the three members of the Court of Appeals panel — M. Margaret McKeown, appointed in 1997 by President Bill Clinton, and Sandra S. Ikuta, a 2006 appointee of President George W. Bush — are women.

The third member of the panel — Daniel A. Bress — was a 2019 appointee of President Donald Trump.

The secretary argued on appeal that the law was directed at the corporation, not its shareholders. Moreover, she pointed out that Meland could vote for whomever he wanted, and therefore he was not injured. Finally, if the company did not comply (and if the secretary decided to assess a fine), it wouldn’t be levied against Meland, but rather OSI.

The panel rejected each of those arguments. While the law was directed at the corporation, it was indirectly aimed at the shareholders because only shareholders can elect directors. As the court put it, “for SB 826 to have any effect at all — it mustโ€ฆ compel shareholders to act.”

While Meland could vote for whomever he wanted, as a rational shareholder he “would understand that a failure to vote for a female would contribute to the risk of putting the corporation in violation of state law and exposing it to sanctions.” Therefore, his vote for a woman was, at the very least, “encouraged” by the law.

Lastly, although any fine would be imposed against the company, Meland was an owner of the company and his economic stake in OSI would be diminished by a fine. Moreover, the claim he was asserting — that he was being forced “to perpetuate sex-based discrimination” — was an individual claim, not a corporate claim.

Accordingly, Meland had enough skin in the game to establish his standing.

SB 826 requires the secretary to issue annual reports that identify all the companies subject to the law and, of those, the ones in compliance.

The most recent report on the secretary’s website is from this March, based on 2020 data. It identifies 647 public companies subject to the requirement that a woman serve on their boards, of which only 311 had reported their compliance in a filing with the secretary, though some may have complied but failed to file the report.

California Partners Project, an advocacy group for gender equity in California, found that before SB 826 took effect there were 183 companies that would become subject to the statute and had no women on their boards. By the end of 2020, that number had fallen to 15.

According to CPP, as of March 1, 2021, there were 418 California companies — with a combined 563 seats to fill — that will need to elect women by the end of 2021 to meet the law’s stepped-up requirements.

Absent further appellate review by the full 9th Circuit Court of Appeals or the U.S. Supreme Court, the case will return to the lower court to consider the merits of Meland’s claim.

JUNE 22, 2016

Local water rules continue to move between emergency conservation and long-term efficiency planning. Santa Rosa’s decision marked a moment when drought policy shifted from blanket state targets toward local supply assessments.

Bay City News reported:

Appeals Court Hears Challenge To Gay Conversion Therapy Law”

LGBTQ protections continue to be fought in courts as states weigh medical regulation against speech and religious claims. The conversion therapy case shows California defending a youth-protection law that later became part of a wider national policy debate.

A 2012 California law that bans sexual orientation conversion therapy for youths under the age of 18 came before a federal appeals court in San Francisco for a second time today.

The law prohibits state-licensed mental health professionals from engaging in “sexual orientation change efforts,” sometimes known as gay conversion therapy, with gay and lesbian minors.

In 2013, the 9th U.S. Circuit Court of Appeals rejected free-speech challenges to the law in a pair of lawsuits filed by parents, therapists and patients.

A three-judge panel said unanimously in 2013 that the law regulates conduct, not speech, and that the state Legislature had a rational basis for concluding the therapy could harm children and using its licensing power to prohibit such treatment.

Today, a lawyer for the plaintiffs in one of the lawsuits asked the same three judge-panel to strike down the law on grounds of additional claims of religious freedom and privacy rights.

The plaintiffs are a minister who is also a licensed family therapist, a therapist who holds religious beliefs that homosexuality is unnatural and changeable, and a man who experienced conversion therapy as an adult.

They contend the law interferes with their free exercise of religion and with the privacy rights of parents and their children.

All three jurists on the panel – Circuit Judges Alex Kozinski, Susan Graber and Morgan Christen – questioned the plaintiffs’ attorney, Kevin Snider, about whether their 2013 ruling hadn’t disposed of the issues in the case.

“If we’ve already held the law regulates only conduct, period, isn’t that the end of the inquiry?” Graber asked.

“I don’t believe it is at all,” Snider answered. He argued it is unconstitutional for the law to “target people because of their religious beliefs and practices.

Christen commented, “The Legislature told us what the purpose of the law was – to prohibit a type of therapy that the Legislature determined to be potentially harmful.”

Deputy California Attorney General Alexandra Gordon, defending the law, said it would prohibit a minister from providing conversion therapy when acting as a licensed therapist, but would not bar a minister from praying about the subject during a church service.

The panel took the case under submission after hearing about 30 minutes of argument and will issue a written decision at a later date.

The plaintiffs appealed to the 9th Circuit after a federal trial judge in Sacramento last year dismissed the religious freedom and privacy claims remaining in their lawsuit.

The law went into effect in 2014 after the U.S. Supreme Court declined to hear appeals of the 9th Circuit’s 2013 decision.

JUNE 22, 2006

Ranked-choice voting remains a live debate in Bay Area elections because it changes turnout, campaign strategy and runoff costs. Oakland’s instant-runoff push shows early local arguments for consolidating elections while preserving voter choice.

Bay City News reported:

Oakland Council Members Support Instant Runoff Voting

Oakland City Council members Nancy Nadel and Pat Kernighan called today for the city to have instant runoff voting, which they said would boost voter turnout and avoid costly runoff elections.

Speaking at a news conference in front of City Hall, Nadel and Kernighan said they’re asking for the City Council to place their instant runoff proposal on the November ballot so the city’s voters can decide if they want to implement such a system.

The matter is being discussed at the council’s Rules and Legislation Committee meeting. Nadel and Kernighan hope the full council acts on it before the end of July.

The two council members said instant runoff voting is an election system that ensures a majority outcome in one election. Voters indicate their runoff choices by ranking their top three candidates. If no candidate receives a majority of first-choice votes, second- and third-choice votes are applied until a majority is achieved.

They said San Francisco successfully used such a system last November to save the time and cost of a second election.

Nadel said the rise in support for instant runoff voting among some council members comes after a record-low primary turnout statewide and a six-way race for mayor in Oakland that nearly ended in a runoff.

Kernighan noted that she faces a runoff in November because she only got 46 percent of the vote in a three-candidate race, less than the threshold of 50 percent plus one vote needed to avoid a runoff.

Nadel, who finished third in the mayor’s race behind winner Ron Dellums and City Council President Ignacio De La Fuente, said instant runoff voting would eliminate the municipal June primary so voters could elect all city offices by majority vote in a November election that would have a high turnout.

She said the turnout for November elections in Oakland is more diverse and is nearly 60 percent higher on average than the turnout in June elections.

Nadel said that with only one election, candidates could spend more time focusing on the issues and less time fundraising.

Nadel said Larry Reid is the only council member who firmly opposes instant runoff voting at this point.


Editorโ€™s Note: All the reporting, writing, and editing of this content was done by human journalists at the time of initial publication. AI tools were used to surface these stories from our internal Bay City News archives and provide the introductory context.