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Gov's Mixed Message on Landmark HBJ Bill

October 2, 2018

 

When he signs a bill, Jerry Brown often writes a characteristically thoughtful, if unconventional, statement to explain his thinking.

 

The one Governor Gandalf just crafted for a landmark change to the state’s corporation law, authored by Santa Barbara State Senator Hannah-Beth Jackson, is a masterpiece of miniaturized, whipsaw political commentary.

 

In enacting the law, which requires publicly traded California corporations to have women directors on their boards, the soon-to-be-ex governor on Sunday issued a 153-word signing message that (a) broadly hinted that Jackson’s bill may prove unconstitutional while (b) flipping the bird at every white male Republican guardian of the patriarchy in Washington.

 

In one fell swoop, Brown not only displayed his well-honed, Jesuit attorney’s chops for the legal niceties of public policy but also demonstrated his unerring instinct for the political zeitgeist:

 

“There have been numerous objections to this bill and serious legal concerns have been raised. I don’t minimize the potential flaws that indeed may prove fatal to its ultimate implementation,” he wrote. “Nevertheless recent events in Washington, D.C. ​— ​and beyond ​— ​

make it crystal clear that many are not getting the message.”

 

Leaving not a shred of doubt that he signed Jackson’s bill in solidarity with the #MeToo movement opposition to the Brett Kavanaugh Supreme Court nomination, Brown appended a notation: 

 

“CC: United States Senate Committee on the Judiciary.”

 

 

HBJ Rejoices. The next morning, Hannah-Beth laughed about Jerry’s philosophizing when she checked in with Newsmakers from O’Hare, en route back home after a visit with the grandkids in Chicago (“What they care about is ‘Nana, ice cream,’” she noted of the grand-spawns’ seeming indifference to her legislative triumph).

 

 

She turned serious, however, in discussing the consequential importance of what is known formally as Senate Bill 826 (“Another glass ceiling is shattered ​— ​this is a giant step for women, businesses, and our economy”), and in forecasting its survival of legal challenge (“The way government contains amoral business practices is by creating regulations”).

 

As Jackson’s bill received widespread national media coverage, many reports by prominent news organizations quoted expert legal opinion that it runs afoul of constitutional and/or civil rights prohibitions.

 

SB 826 requires that, by the end of next year, companies headquartered in California have at least one woman on their boards, and two or three, depending on a board’s size, two years later. 

 

With companies failing to comply subject to fines up to $300,000, the L.A. Times reported that nearly 400 companies in California might be covered by the act because they have no women directors. 

 

In Sacramento, the Chamber of Commerce fiercely opposed passage, saying it would impose illegal “quotas” violating the state’s civil rights laws, as well as the “internal affairs doctrine” for publicly held corporations, arguments echoed in day-after coverage.

 

 

 The New York Times, for example, quoted Loyola Law School professor Jessica Levinson, who characterized the law as “blatant gender preference.” 

 

She predicted that the courts would overturn the measure because less onerous methods exist to address an acknowledged dearth of female corporate directors, such as “incentives, tax breaks or preferential government treatment if you reach certain diversity thresholds.”

 

On Tuesday, the Times upped the ante, as popular business columnist Andrew Ross Sorkin trashed the measure in his widely-read “DealBook: column – despite his own support for increasing the number of women on corporate boards.

 

Why? California’s legislature concedes that the law could be unconstitutional. Its requirements may not apply to companies chartered elsewhere. (A big loophole: By one estimate, the only Fortune 500 company affected is Apple.) And sudden disruption could hurt companies’ performance.

 

Joe Grundfest of Stanford, a longtime advocate for increasing board diversity, said of the move, “I fear the cure is worse than the disease.”

 

Jackson shrugged off such criticism, urging companies to focus on making the first-in-the-nation law work rather than trying to strike it down: “So many corporations are living in the 1950s,” she said. “The life experience of women needs to come to the table.”

 

 

Jerry's Mic Drop: After four terms as governor, Brown signed SB 826 on the last day of his last legislative session deadline for wading through hundreds of bills. 

 

Abetted in the task by Anne Gust, his wife and a former high-powered corporate attorney, Brown overcame his stated legal doubts, seemingly swayed by principled feminist argument.

 

Brown noted: “Corporations have been considered persons” at least since a famed 1886 federal court ruling ​— ​decades before women were allowed to vote.

 

“Given all the special privileges that corporations have enjoyed for so long,” he wrote, “it’s high time corporate boards include the people who constitute more than half the ‘persons’ in America.”

 

CC: Judiciary Committee.

 

 

 

JR

 

(A version of this post also is published in this week's edition of the Santa Barbara Independent).

 

Governor Jerry (Gandalf) Brown on his way to retirement (Photo illustration by Phil Trounstine for Calbuzz); Hannah-Beth Jackson; Professor Jessica Levinson (Loyala Law School); New York Daily Mirror front page after women won the right to vote on August 18, 1920; Gov. Brown's complete signing message on Jackson's Senate Bill 826.

 

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