Meland v. Weber

• Decision Date: 21 June 2021
• Docket Number: No. 20-15762,20-15762
• Citation: 2 F.4th 838
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: Creighton MELAND, Plaintiff-Appellant, v. Shirley N. WEBER, Secretary of State of California, in her official capacity as Secretary of State of the State of California, Defendant-Appellee.

2 F.4th 838

Creighton MELAND, Plaintiff-Appellant,

v.Shirley N. WEBER,^* Secretary of State of California, in her official capacity as Secretary of State of the State of California, Defendant-Appellee.

No. 20-15762

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 10, 2021 San Francisco, California

Filed June 21, 2021

Anastasia P. Boden (argued), Joshua P. Thompson, and Daniel M. Ortner, Pacific Legal Foundation, Sacramento, California, for Plaintiff-Appellant.

Lara Haddad (argued), Deputy Attorney General; Mark R. Beckington, Supervising Deputy Attorney General; Thomas S. Patterson, Senior Assistant Attorney General; Attorney General's Office, Los Angeles, California; for Defendant-Appellee.

Christina Sandefur, Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute, Phoenix, Arizona, for Amicus Curiae Goldwater Institute.

Thomas R. McCarthy and Tiffany H. Bates, Consovoy McCarthy PLLC, Arlington, Virginia, for Amicus Curiae Philanthropy Roundtable.

Melissa A. Holyoak and Anna St. John, Hamilton Lincoln Law Institute, Washington, D.C., for Amicus Curiae Hamilton Lincoln Law Institute.

Jonathan F. Mitchell, Mitchell Law PLLC, Austin, Texas; Daniel I. Morenoff, Equal Voting Rights Institute, Dallas, Texas; for Amicus Curiae Linda Chavez.

Amanda Narog, Bopp Law Firm, Terre Haute, Indiana; Jennifer C. Braceras, Independent Women's Law Center, Winchester, Virginia; for Amicus Curiae Independent Women's Law Center.

Before: M. Margaret McKeown, Sandra S. Ikuta, and Daniel A. Bress, Circuit Judges.

IKUTA, Circuit Judge:

California Senate Bill 826 (SB 826) requires all corporations headquartered in California to have a minimum number of females on their boards of directors. Corporations that do not comply with SB 826 may be subject to monetary penalties. The shareholders of OSI Systems, Inc., a corporation covered by SB 826, elect members of the board of directors. One shareholder of OSI, Creighton Meland, brought an action challenging the constitutionality of SB 826 on the ground that it requires shareholders to discriminate on the basis of sex when exercising their voting rights, in violation of the Fourteenth Amendment. We hold that because Meland has plausibly alleged that SB 826 requires or encourages him to discriminate on the basis of sex, he has adequately alleged that he has standing to challenge SB 826's constitutionality. See Monterey Mech. Co. v. Wilson , 125 F.3d 702, 707 (9th Cir. 1997).

I

A

The California Legislature enacted SB 826 in 2018.¹ According to the legislative findings, "[i]f measures are not taken to proactively increase the numbers of women serving on corporate boards, studies have shown that it will take decades, as many as 40 or 50 years, to achieve gender parity among directors." S.B. 826(1)(f), 2017-2018 Leg., Reg. Sess. (Cal. 2018). To address this, the California Legislature mandated that public corporations with principal executive offices located in California appoint a certain number of female directors to their boards. SB 826 defines a "female" as "an individual who self-identifies her gender as a woman, without regard to the individual's designated sex at birth." Cal. Corp. Code § 301.3(f)(1).

By the end of 2019, a covered corporation must have "a minimum of one female director on its board." Id. § 301.3(a). By the end of 2021, any covered corporation with six or more directors must have at least three female directors, any covered corporation with five directors must have at least two female directors, and any covered corporation with four or fewer directors must have at least one female director. Id. § 301.3(b)(1)–(3). SB 826 also imposes reporting requirements, including requiring the Secretary of State to publish reports showing which corporations are in compliance with the law. Id. § 301.3(d)(1).

To enforce SB 826, the law authorizes the Secretary of State to impose fines for violations, ranging from $100,000 to $300,000 per violation. Id. § 301.3(e)(1)(A)–(C). Each director seat required to be held by a female, which is not held by a female, counts as a violation. Id. § 301.3(e)(2). To date, the Secretary of State has not enacted regulations or imposed fines.

B

Creighton Meland, Jr. is a shareholder of OSI Systems, Inc. (OSI). Because OSI is a publicly traded company with headquarters in California, it is subject to SB 826. The shareholders of OSI, including Meland, are responsible for selecting the corporation's directors by voting for directors at annual meetings. See, e.g. , id. § 600(b). OSI's nominating committee, as well as individual shareholders or groups of shareholders, may recommend candidates or submit names of candidates for election to OSI's board of directors. To become a member of OSI's board, however, a candidate must receive a plurality of shareholder votes.

In November 2019, Meland sued California's Secretary of State, alleging that SB 826 discriminates on the basis of sex in violation of the Equal Protection Clause of the Fourteenth Amendment and "seeks to force shareholders to perpetuate sex-based discrimination." The complaint alleged that because OSI had seven male board members, SB 826 required OSI to add one female board member by the end of 2019 and two additional female board members by the end of 2021. The complaint also alleged that Meland intended to vote on board-member nominees in the December 2019 annual shareholder meeting and at subsequent meetings. Meland sought declaratory relief, injunctive relief, and attorneys’ fees and costs.

At the December 2019 annual shareholder meeting, OSI shareholders elected a female to fill a vacant board-member seat. The state then moved to dismiss Meland's complaint for lack of Article III standing. The district court granted the state's motion, reasoning that Meland had not suffered an injury in fact, because SB 826 imposed requirements and potential penalties on corporations, not shareholders. Moreover, the district court held that SB 826 did not prevent Meland from voting for a male director. And the district court concluded that, even assuming Meland had established an individualized injury, his injury was not actual or imminent, because OSI was in compliance with SB 826. Finally, the district court held that Meland did not have prudential shareholder standing, because he had not suffered a direct injury separate from any injury to OSI. Meland timely appealed.

C

The district court had jurisdiction under 28 U.S.C. § 1331. We have jurisdiction under 28 U.S.C. § 1291. We "review de novo an order granting a motion to dismiss for lack of standing under Federal Rule of Civil Procedure 12(b)(1) and construe all material allegations of fact in the complaint in favor of the plaintiff." Southcentral Found. v. Alaska Native Tribal Health Consortium , 983 F.3d 411, 416–17 (9th Cir. 2020). "The party invoking federal jurisdiction bears the burden of establishing" the elements of standing, and "each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e. , with the manner and degree of evidence required at the successive stages of the litigation." Lujan v. Defs. of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). On a motion to dismiss, "general factual allegations of injury resulting from the defendant's conduct may suffice." Id. In its motion to dismiss Meland's complaint under Rule 12(b)(1), the state made a facial challenge, meaning it "accept[ed] the truth of the plaintiff's allegations but assert[ed] that they are insufficient on their face to invoke federal jurisdiction." Leite v. Crane Co. , 749 F.3d 1117, 1121 (9th Cir. 2014) (cleaned up).

II

A

The key question before us is whether Meland has adequately alleged that he has Article III standing to challenge the constitutionality of SB 826. To have standing, the party invoking federal jurisdiction must allege "a case or controversy within the meaning of Art. III of the Constitution." Babbitt v. United Farm Workers Nat'l Union , 442 U.S. 289, 297, 99 S.Ct. 2301, 60 L.Ed.2d 895 (1979).

Here, Meland bears the burden of establishing the three "irreducible" elements of Article III standing. Lujan , 504 U.S. at 560, 112 S.Ct. 2130. The "first and foremost of standing's three elements," and the only element at issue here, is that the plaintiff has suffered "an injury in fact." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) (cleaned up). An injury in fact is "an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical." Lujan , 504 U.S. at 560, 112 S.Ct. 2130 (cleaned up). For an injury to be actual or imminent, the "threatened injury must be certainly impending." Clapper v. Amnesty Int'l USA , 568 U.S. 398, 409, 133 S.Ct. 1138, 185 L.Ed.2d 264 (2013) (cleaned up). "Allegations of possible future injury are not sufficient." Id. (cleaned up).

To confer standing under Article III, an injury in fact must "affect the plaintiff in a personal and individual way," Spokeo , 136 S. Ct. at 1548 (citation omitted), that is beyond "the psychological consequence presumably produced by observation of conduct with which one disagrees," Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc. , 454 U.S. 464, 485, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982). Although this means that an "abstract, generalized grievance" is insufficient to confer standing, Buono v. Norton , 371 F.3d 543, 547 (9th Cir. 2004), a person may suffer a concrete, personalized injury stemming from noneconomic harm, Ass'n of Data Processing Serv. Orgs., Inc. v. Camp , 397 U.S. 150, 154, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970) ; see also Valley Forge , 454 U.S. at 486, 102 S.Ct. 752 ("[W]e do not retreat from our earlier holdings that standing may be predicated on noneconomic injury.").

Consistent with these standing principles, we have long held that "[a] person...