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Response to the lawyer's current bylaws draft
1-24-03


The lawyer's bylaws draft
Response index

Below is a detailed response from Carl Gunther [ KPFK area ] and some back and forth with Gregory Wonderwheel [ KPFA area ]

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From: Carl Gunther [ KPFK area ]
Date: Fri Jan 24, 2003 5:38 am
Subject: How Finck Bylaws Create Unaccountable Power and What to Do About It

The Finck bylaws draft recently forwarded by Carol Spooner contains provisions that seriously weaken accountability and concentrate power in the hands of elites.

The unjustified tossing out of diversity adjustments is the most obvious provision that perpetuates elite control of Pacifica. But there are other provisions that have nothing to do with diversity that lead to an even more dramatic concentration of power in the hands of an unaccountable few. The following is a summary of the worst of these features. Following this summary are my recommendations for restoring bottom-up democracy and accountability to these bylaws.

1) Article 6, Section 2 specifically allows a local board delegate to the national board to remain on the national board even after they are no longer on the local board that elected them. In fact, language affirming that was added by Finck. And, there was a footnote in the original draft sent to Finck (see the redlined version, available at http://www.wbai.net/bylaws_revise/br_draft_and_letter1-17-03.html) that specifically asked him to insert such a provision! I quote:

"As long as a Director is a Delegate of a Listener-Sponsor Board at the time s/he was elected, s/he can continue to serve as a Director, even if his/her term as a Delegate ends during his/her term as a Director."

Now, consider that one cannot be elected to the national board until one has served at least one year of a three-year term on a local board. This means that (assuming that third-year election is prohibited) one could be elected to the national board at the end of one's first or second year of LSB service, or at the end of one's first, second, third, fourth or fifth year of service for two-term LSB members.

If the person so elected to the national board is either not re- elected at the end of their first LSB term, or terms out after their second term, then they could continue on the national board for as many as two years after they have left the local board.

In the worst case scenario, if every national board member were elected after their second or fifth year in office, and the ones elected during their second year were not re-elected to a second LSB term, that would mean that fully two-thirds of all "local board" reps to the national board would not be serving on their local boards at any given point in time!

To compute the more likely case, if we assume that on average 1/2 of all LSB members end up being re-elected to a second LSB term, and that exactly equal numbers of Directors are elected after their first and second years for one-termers, and after their first, second, third, fourth and fifth years for two-termers, then we have:

0.5 (one termers) * 1.5 years (average as lame duck) = 0.75 0.5 (two termers) * 0.6 years (average as lame duck) = 0.3

for a total of 1.05 years average of each national board member's 3 year term spent while that national board member is no longer a member of the local board that elected him or her. This means that on average 35 percent (1.05 / 3) of all local board "reps" at any given moment in time would no longer be members of the local boards that elected them to that post! That is the likely case, not the worst case.

Note also that less popular board members who are not re-elected to their LSBs by listeners will end up spending twice the amount of time on average as "lame ducks" on the national board as those who are re-elected.

Local boards are allowed to specifically recall a national board member by a 2/3 vote, but listeners are not specifically enabled to do this (see below for a discussion of listeners' abstract vs. specific rights in this regard). Note also that a local board can decide to remove one of its own members by a mere majority vote, but since a 2/3 vote is required to remove a rep to the national board, a person could remain on the national board even after having been specifically removed from her or his local board by the LSB that elected that person! This is yet another example of how power flows in a top-down manner in this bylaws model.

If listeners somehow managed to recall a member from their LSB (and there are no specific mechanisms in the draft for such a recall), that member would still not automatically be removed from the national board unless they (somehow) managed to separately recall that member specifically from the national board. That is, two separate recall votes would be required, and, since there are no specific provisions for initiating either one of these in the Finck draft, this means that each one would probably require some kind of a legal challenge!

This represents a significant reduction in the accountability of the national board to listeners. Instead of a firm chain of accountability going from the national board back to the local boards who elected them and from there to the listeners, we have an elite body on which reps can remain who have long ago worn out their welcome with listeners and even with the majority of their own local board members.

2) Every specific procedure for listener-based recall of local and national board members has been struck from the document! Yes, Article 3, Section 5 states that "All Members shall have the right to vote...on the election and removal of Delegates, on the removal of Directors..." But, the specific means defined for removal of delegates and directors do not include listener voting of any kind.

In Article 4, Section 9, which defines the means for removal of LSB delegates, only the local board itself, or the national board, acting in a top-down manner (!), may pluck a local station board member from her or his post. There is absolutely no empowerment of listeners in that regard. Listeners may petition an LSB to remove a delegate, but such removal is entirely at the discretion of the LSB itself, with or without a petition. With all specific provisions for a listener-based recall process now struck from the document, how could listeners ever act upon their supposed "right to vote" on removal? There is no way even to know whether a majority, two- thirds, or other level of voting would be required.

Similarly, Article 6, Section 6, states that national board members can be removed only by the national board itself (by a 2/3 majority) or by the local board that elected that member to the national board (by a 2/3 majority). No mention of a listener-based process is provided.

Why are the powers of local and national board members with respect to removals spelled out specifically while nothing is said of the power of listeners to remove anyone? What is the meaning of this abstract right of listeners to recall without any specific clauses describing how it is to be implemented? There is no petition process for initiating a listener recall vote, no voting thresholds - nothing.

Even if a case were brought by listeners, might their abstract "right to vote" on removals be construed by a court to pertain only to an after-the-fact vote on whether or not a board-initiated removal should be allowed to stand - and even then only if listeners specifically demanded it? That is, would listeners be deprived of their right to initiate a recall? Perhaps a lawyer could answer these questions, but it seems quite clear to me that specific language empowering listeners with respect to recall elections was deliberately struck from the document, and that that puts listeners at an enormous disadvantage in trying to exercise whatever recall power they may have under the law.

3) Article 6, Section 1C creates two appointed ("at-large") seats on the national board. These seats will be unaccountable to anyone by the board majority that fills them, and having them will tend to create an undefeatable national board majority, since the majority controls appointments to those seats.

Any affiliate (which is any station with a contract with Pacifica to rebroadcast its content) can nominate candidates for such at-large positions, giving the national board majority enormous discretion in filling these seats. Interestingly, it takes three local boards to nominate, but only one (potentially tiny) affiliate, and that affiliate may rebroadcast only a tiny amount of Pacifica's content. So, make no mistake about it - these are appointed national board seats, fully under the control of the national board majority for use in enhancing its own power.

3) Article 6, Section 1C gives the Executive Director a "tie- breaking" vote on the national board. Since this vote is available in about half the cases that it would make a difference (that is, it can break a tie, but it cannot create a tie), it is essentially worth half a vote. And, since the board majority picks (and has the power to fire) the E.D., it represents yet another enhancement of the power of the board majority and another 1/2 vote on the national board that is not accountable to either local board members, listeners or staff.

4) Article 6, Section 4B completely defeats proportional representation at the national board level by allowing only one national delegate from a local board to be elected at a time. That is, with only one seat to be filled in each and every election, that seat will be filled by a straight majority vote, and even large minorities will receive zero representation on the national board.

The solution to this (and to the lame duck problem as well) is one year terms on the national board (which would allow LSBs to elect several board reps at once each year instead of just one at a time). Holding a vote among local board members is not a difficult thing! If someone is doing a good job at the national level, they'll be re- elected, thereby preserving continuity. There is no need for three year national board terms.

5) According to Article 4, Section 9, any member of your local station board can be removed by a simple majority vote of the national board! That is, if you are a listener or staff member, and have just elected a reformer to your local board, and the national board doesn't want the organization to be reformed, it can just dump your choice the day after the election!

To appreciate the full significance of this, consider what I said in item (4) above about this draft completely defeating proportional representation at the national board level. The national board will consist entirely of persons who were either 1) elected by local board majorities, or 2) were appointed by national board members themselves. So, this extremely majoritarian, unaccountable, and, in all probability (given the elimination of diversity requirements), white, national board will have the power to reach its long arm down into any local board and toss out anyone who, in its opinion, is engaging in "conduct that is adverse to the best interests of the Foundation or the LSB." Recall that in France the "interests" of the nation were once considered to be fully synonymous with the person of the king.

Thinking about organizing a recall vote within your LSB of your national board rep? Watch out! That rep may just organize a recall vote against you! And note that he or she only needs 1/2 of the votes of the national board to toss you out, while you must organize 2/3 of your LSB to toss her or him out. And remember, all of the members of the national board, including the one you're trying to remove, are either elected by local board majorities or appointed by other national board members, so the person you are getting rid of is a member of a pretty exclusive little country club that may just like that person enough to go after you. Good luck!

Power in the Finck model flows from the top down, not from the bottom up. When they vote for their national board members, local board members are not electing representatives; they are electing their own masters.

6) Reduction of local boards to 13 members is contrary to the sense of the LAB votes and was done without justification. It seriously compromises proportional representation at the local board level, especially given that elections are staggered, resulting in a greatly reduced number of seats per election, and hence less local board representation for minorities (defined by either ethnicity, gender, or viewpoint) within the listener community.

7) The addition of the 13th board member (although the means of selection is left for the iPNB to determine in the document) amounts to an appointed local board seat, since the election of that single additional board member by staff and listeners both (as stated in the draft) would otherwise require an impractical third ballot and a separate slate of candidates for that seat. Appointed seats tend to create an entrenched local board majority and lack accountability to listeners and staff, and therefore should be opposed.

8) Article 4, Sections 9D and 9E allow ejection of any member of a local board by a simple majority vote of that board. This defeats proportional representation by giving the majority the ability to remove any members having minority viewpoints to which it objects.

9) Article 5, Section 2A, in combination with Article 3, section 1A allows station staff to run for listener seats. This is a conflict of interest and should be specifically prohibited. Also, station management will have name recognition and potentially significant air time, even if they do not host their own programs, giving them an unfair advantage in listener elections.

10) Article 4, Section 10. Filling of vacancies should be done from the STV ordering if available. The draft leaves this up to the national board to decide. The LABs should nail this down. If vacancies are not filled from the STV ordering, this creates an even greater incentive for local and national board majorities to exercise the power they have been given by this draft to remove minority members of local and national boards.

For most of the above problems, there are obvious solutions. And here they are!

1) Reduce the term of national board members to one year, with re- election allowed (by the LSBs) so long as the member remains on his or her LSB.

2) Eliminate all appointed seats from the national board. If there is to be an affiliate seat, the affiliates should collectively elect that seat, not the national board majority. If that is not practical, then create an affiliate liaison committee at the national board level to address the concerns of affiliates, or, at most, appoint a non-voting national board seat from among the affiliates, and leave it at that.

3) Eliminate the power of the E.D. to break ties in votes of the national board.

4) Eliminate the ability of the national board to remove a local board member from a local board under any circumstances. If we are to have a bottom-up system then the power of recall must belong primarily to the listeners who elected that member.

5) Eliminate the ability of the national board to remove a national board member from the national board under any circumstances. This power belongs to the local board members, and the listeners, who elected that person. Otherwise, there is no real representation.

6) Restore the specific language that was in the draft before Finck removed it describing a process for listeners to exercise their right to recall local board members.

7) Add a rule that no local board rep to the national board may remain on the national board once their term on the local board that elected them ends for any reason. This will effectively give listeners the right to recall national board members by recalling their own local board reps.

8) Eliminate the special so-called "tie-breaking" 13th seat (which would almost certainly have to be appointed) from the local boards and restore all local boards to a specific number between 16 and 24 reps, as called for by the LAB straw votes.

9) Require that any local board vote to throw out a local board member be unanimous among all board members other than the member being ejected. This will prevent the ejection of minority board members by local board majorities, which defeats proportional representation.

10) Require that all vacancies on local or national boards be filled from the STV ordering of the election that elected the vacating member, if additional candidates are available, and that if no more candidates are available in the STV ordering that seat will remain vacant until the next election unless total board size declines below a certain number, in which case a special election can be held.

11) Prohibit members of station staff and any employees of the Foundation from running for listener seats on local boards.

And, of course, restore diversity criteria and perform a serious evaluation of whatever legal challenges we might encounter as a result of doing so, and plan a general strategy for meeting those challenges.

Remember the right to the exercise the powers of the Foundation ultimately resides with the national board. That is why anyone we put on that board has to be totally accountable to those who put them there.

Simple, right?

Carl

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To: freekpfk@yahoogroups.com
From: A. Gregory Wonderwheel
Date sent: Sun, 19 Jan 2003 17:56:03 -0000
Subject: [freekpfk] Re: Finck Diversity Arguments: The Emperor Has No Clothes

Carl's presumptions about Corporations Code Section 318 pretty much sum up what is wrong about his entire analysis.

He sees that there is a registry for "distinguished women and minorities" and then jumps to the conclusion that this registry somehow endorses percentage quotas of diversity on boards.

The act establishing Section 318 is known as the Corporate Governance Parity Act of 1993. (Statutes 1993 Chapter 508) The Act states in its section 2 preamble, "The purpose of this act is to promote gender, racial, and ethnic parity in corporate governance by facilitating recruitment of qualified women and minorities to serve on corporate boards of directors."

The operative word is "recruitment." No one in Pacifica argues with the purpose of having diversity in the candidates recruited for Pacifica boards and committees. But nothing in the act even remotely suggests that the recruitment is intended for anything more than offering candidates for the normal selection processes of corporations. The registry is there to defeat the argument that corporations can't find qualified distinguished women and minorities to recruit. That is its full and complete purpose.

The registry is currently maintained at CSU Fullerton. http://www.fullerton.edu/calregistry/index.htm

Though Section 318 is in the division of the Corporations Code that doesn't directly apply to nonprofit corporations, nonprofits certainly may access the list. Usually for-profit directors are paid positions while nonprofit directors are unpaid volunteer positions. Stockholding corporations require elections for their boards on a one-

share-one-vote basis. Thus those persons with the majority of shares elect who is going to be on the boards. Nothing in Section 318 comes close to authorizing quota discrimination in those elections. It is a recruitment tool only.

In other words, the Act says parity in "economic equality" of women and minorities comes from "sufficient opportunities to contribute to society to an extent commensurate with their potential." The Act is intended to counter the "the effects of disparate treatment in employment." Therefore, the registry of women and minorities was established to facilitate the recruitment of women and minorities. Only those women and minorities elected shall serve.

Everyone wants a Pacifica registry of qualified candidates with Pacifica-oriented factors of distinguishing information. But by twisting Section 318 into some kind of authorization for racial percentage-quotas Carl shows that he is the tailor stitching and spinning invisible garments.

Gregory Wonderwheel

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From: Carl Gunther
Date: Sun Jan 19, 2003 7:36 pm
Subject: Re: Finck Diversity Arguments: The Emperor Has No Clothes

Gregory has attacked just one of the many arguments that I have made against the position of Mr. Finck. Although none of my other arguments depends in any way upon the one that he has attacked, he goes on to state that what's wrong with that argument sums up what is wrong with my entire analysis. That is not a fair or reasonable conclusion.

Most of my arguments have been directed at showing how little substance there is to Kevin Finck's arguments, how little reason there is in general to believe that diversity criteria would violate any laws, and how likely it is therefore that they would be found to be legal if they were ever challenged. Gregory has not addressed those arguments, and by not doing so he has (so far at least) allowed those arguments to stand.

My argument regarding Section 318 (the one that Gregory has singled out for criticism) is my one attempt to go beyond merely debunking Finck by going on to show that there is actually some positive statement already in the law that lends support to the position that diversity criteria are legal (as opposed to merely showing that there is no reason to believe that they are illegal). It is not necessary to have such evidence in order to show that no clear reason exists for believing that they are not legal, which is what I believe I have shown in my deconstruction of Mr. Finck's insubstantial arguments against those criteria.

Regarding Section 318, let's look at Gregory's argument. Gregory claims that I am "twisting Section 318 into some kind of authorization for racial percentage-quotas." Actually, I very carefully stated that "there is a subtle difference between a corporation deliberately and preferentially seeking out women and minorities for its board, as encouraged by Section 318, and a corporation setting an absolute quota on how many people of color and how many women should be on its board."

Having said that, let me acknowledge, as I believe I already have in my earlier message, the fact that Section 318 only "strongly suggests" (in the words of my earlier message), but does not in itself prove, the legality of diversity criteria in hiring corporate board members. Only an actual legal decision would provide truly conclusive proof of that kind, and so far no one involved in these discussions has claimed there has been any such decision, one way or the other.

In arguing for the irrelevancy of Section 318, Gregory contends that it is intended only to supply a pool of viable candidates from which corporations can select. A corporation could therefore avail itself of this registry while having no specific quotas in place. That is something that I specifically acknowledged in the section of my message just quoted above.

What I actually claimed is that Section 318 "suggests" that corporations are being encouraged by the state to select board candidates based upon their race and/or gender in order to attain diversity quotas.

Now it is true, as Gregory argues, that a particular corporation could utilize this registry merely to build its candidate pool, and then could select from that pool solely based upon the technical merit of the candidates. There is therefore no necessary discrimination in a particular corporation's utilization of the registry.

Therefore, looking back at what I have written, I can see that I spoke too strongly in one small part of what I said when I stated that:

"...if preferential selection of a corporation's board members were illegal under Unruh, then this section of the Corporations Code would be directly encouraging and abetting California Corporations in breaking the law."

In fact, discrimination by corporations is only facilitated, and thereby indirectly encouraged, but not actually directly encouraged, by the state's actions in setting up this registry.

But the state's own goals in this are clear. It wants to attain more diverse corporate boards and it clearly states that in Section 318. In pursuit of that goal, it has created a registry in which only women and people of color may be listed. That is, it is specifically depriving white male candidates of the right to be included in this registry, thereby preferentially providing a service that is intended to aid only candidates of color and women in obtaining a place on corporate boards, in order to attain its goal of greater diversity on those boards. And, it is specifically encouraging corporations to avail themselves of this discriminatory registry for the express purpose of creating more diverse corporate boards.

So, if the state were to argue that corporations should not discriminate in order to attain diversity, then that would certainly be a "do as I say, not as I do" kind of an argument, wouldn't it? In other words, HOW COULD THE STATE LEGITIMATELY ARGUE THAT CORPORATIONS SHOULD NOT DISCRIMINATE BASED UPON RACE AND GENDER IN ATTEMPTING TO ATTAIN DIVERSE BOARDS, WHEN THE STATE ITSELF HAS A LAW ON THE BOOKS THAT REQUIRES IT TO DISCRIMINATE IN ORDER TO ATTAIN PRECISELY THAT END?

Furthermore, I contend that the utilization of such a discriminatory registry in a corporation's process of finding board members creates a process that is itself biased toward the inclusion of women and people of color. The state has in fact encouraged corporations to utilize this registry, and hence is implicitly approving of such a biased process.

So, while I admit that I overstated the significance of 318 in claiming it to be in direct conflict with any interpretation of Unruh that would disallow diversity quotas, I continue to believe that Section 318 provides strong suggestive evidence that the state approves of corporations discriminating based upon race and gender in selecting the members of their boards, if that discrimination is undertaken in order to improve the diversity of those boards.

My other arguments against any interpretation of Unruh that would disallow diversity criteria remain strong and unaffected by whatever one might think or argue about the pertinence of Section 318 in that regard.

Carl

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From: Carl Gunther To: PacificaNationalBylaws@yahoogroups.com Cc: kfinck@f..., freekpfk@yahoogroups.com,

The long awaited lawyerly clothing for the naked assertions that have been made regarding the illegality of diversity criteria has finally arrived. But even a child can see that the stitching is made from invisible thread, and that all of the arguments would soon fall apart, if only there were anything there to begin with. After reading these vacuous statements, it would be almost refreshing to hear arguments that were made up out of whole cloth.

Even chief tailor Kevin Finck isn't claiming that his arguments amount to very much, although that hasn't stopped him from arrogantly bulling ahead and removing diversity from his latest draft of our bylaws. Let's look at what he has stated in his letter justifying the removal of diversity criteria (along with a raft of other changes that completely and arbitrarily violate the "sense of the LABs" straw votes taken thus far).

He starts out by referring to some of the most reactionary legal decisions of our day:

The 1978 Bakke decision, which prohibits affirmative action programs for university admissions from using quotas unless absolutely necessary.

The 1989 Richmond vs. Croson decision, which pertains to affirmative action in hiring government contractors, and which decided that such programs must address a compelling governmental interest and must be narrowly tailored to address a prior pattern of discrimination that must be proven.

The present Grutter vs. Bollinger case challenging affirmative action at the University of Michigan, in which the Bush administration has recently intervened.

Finck then goes on to state that:

"Although

the majority of pivotal cases have involved admissions to educational institutions or employment with for-profit companies, this does not COMPLETELY PRECLUDE [emphasis added] the application of findings such as these to non-profits, such as Pacifica, especially where the proposed quotas could be interpreted as disqualifying eligible individuals from positions of control and authority in Pacifica solely on the basis of race or gender..."

Well, what, if anything, in this life or the next, is "completely precluded?" What Finck is implying is that the mere possibility (not probability - possibility) that these reactionary decisions could be stretched to apply to Pacifica if it adopts diversity criteria should be a sufficient argument for throwing those criteria into the dustbin. Apparently, he believes that the value that Pacificans place upon diversity is pretty close to zero, since he feels that a mere possibility of this kind, however unlikely, should be enough for us to say "well, then, let's just forget it."

Let's look at some of the differences between these cases and the situation of Pacifica in applying diversity requirements.

As already pointed out by Finck, these cases involve admission to educational institutions or the awarding of government contracts. In other words, they involve the race- or gender-based apportionment of things (education and contracts) that provide direct material benefits to those receiving them.

Now, it is true that Pacifica provides direct benefits to the community, in the form of its programming and its employment. But neither of these benefits is directly affected by diversity quotas! Diversity quotas only affect the difficulty of getting elected as a member of one of Pacifica's boards. So, unless Finck is prepared to argue that membership on our boards is an individual benefit akin to receiving a contract, employment, or an education, there is absolutely no parallel between Pacifica's proposed diversity requirements and the targets of these decisions.

Furthermore, diverse boards would arguably (and quite probably) have the effect of reducing race and gender discrimination in the apportionment of the direct benefits (programming and employment) that Pacifica provides. In fact, that is one of our most important reasons for wanting diversity quotas in the first place!

As for a position of "control and authority" being an individual benefit, we are protected from that charge by two things. The first is the fact that there are no direct benefits offered to members of our boards, as there are to contractors, employees and students, respectively, in the various decisions cited. Board seats are uncompensated positions and if anything are likely to hold back those elected to them in their respective careers. The second is the prohibition against personal gain that will be an important part of our bylaws. The third is the fact that these positions are elected positions, and therefore the persons so elected are representatives of those who elected them, and as such are subject to recall if they abuse their positions by using them for personal gain. Hence, what we have is representation, not "control and authority" by an individual, as claimed by Finck.

Finck then moves on to California's Unruh Civil Rights Act. He quotes the act as follows:

"[a]ll persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, or disability are entitled to the full and equal accommodations, advantages, facilities, privileges or services in all business establishments of every kind whatsoever."

He then points out that non-profits are not exempt from the act, which is true. From which he concludes that Pacifica may be subject to its equal treatment provisions, which is also arguably correct.

And that is where he leaves it. That is, he makes no argument that Pacifica would be found to be in actual violation of the Unruh Act by virtue of applying diversity criteria. So, why mention it, then? What are we paying this guy to do?

Left hanging in the air by Finck is the implication that somehow Pacifica could be found to be in violation of Unruh. But he makes no argument or even claim to that effect.

Against this unstated and unargued claim I will only repeat more or less what I have stated above. The "accommodations, advantages, facilities, privileges or services" mentioned within the several sub- sections of section 51 (Unruh) are all things that have a direct material impact upon individuals, such as discrimination in the sale or rental of housing, provision of access for those with disabilities, accessible housing for senior citizens, the awarding of contracts, charging for services, freedom from intimidation or violence, awarding of franchises, and sexual harassment.

Service upon Pacifica's boards, as I have already argued above, is not such a material benefit. And that is the only thing that is affected by diversity criteria. In fact, there is no case of which I am aware in which Unruh has been applied in connection with the awarding of positions within any internal governance structure, let alone specifically a corporation's board. Lawyer Gregory Wonderwheel says that he is also unaware of any such case. So, there is an enormous difference between our using diversity criteria on the one hand, and what Unruh states, and the cases to which Unruh has been applied so far, on the other.

In fact, the California Corporations Code contains a section (318) that requires the state to encourage, and to provide direct assistance for, deliberate attempts on the part of (in this case, for-

profit) corporations to attain diversity through preferential inclusion of minorities and women in selecting the members of their boards. For the full text, see:

http://www.leginfo.ca.gov/cgi- bin/waisgate?WAISdocID=53338422104+0+0+0 & WAISaction=retrieve

This section establishes a registry, to be maintained by the state itself, of members of minority groups who are willing to serve on corporate boards. Persons registering for this service are specifically identified based upon their race and gender. Such information is provided on demand to any corporation that would like to attain diversity on its board by including one or more of the persons identified via this registry.

I have copied the relevant parts of this section below in order to show you how clearly and deliberately it encourages preferential appointments to corporate boards based upon race and gender. My comments continue following these quotations.

======

318. (a) The Secretary of State shall develop and maintain a registry of distinguished women and minorities who are available to serve on corporate boards of directors. As used in this section, "minority" means an ethnic person of color including American Indians, Asians (including, but not limited to, Chinese, Japanese, Koreans, Pacific Islanders, Samoans, and Southeast Asians), Blacks, Filipinos, and Hispanics.

(c) ... each woman or minority who participates in the registry may disclose any number of personal attributes that may contribute to board diversity. Those attributes may include, but are not limited to, gender, physical disability, race, or ethnic origin.

(i) The Secretary of State shall make information contained in a reasonable number of registrants' transcripts available to any corporation or its representative. A "representative", for purposes of this subdivision, may be an attorney, an accountant, or a retained executive recruiter. A "retained executive recruiter", for purposes of this subdivision, is an individual or business entity engaged in the executive search business that is regularly retained to locate qualified candidates for appointment or election as corporate directors or executive officers.

(j) The Secretary of State may also grant access to a reasonable number of registrants' transcripts to any other person who demonstrates to the secretary's satisfaction that the person does both of the following: (1) Seeks access to the registry in connection with an actual search for a corporate director. (2) Intends to use any information obtained from the registry only for the purpose of finding qualified candidates for an open position on a corporate board of directors.

(p) The Secretary of State may cooperate with the California Commission on the Status of Women, the California Council to Promote Business Ownership by Women, the Senate Commission on Corporate Governance, Shareholder Rights, and Securities Transactions, women's organizations, minority organizations, business and professional organizations, and any other individual or entity the secretary deems appropriate, for any of the following purposes: (1) Promoting corporate use of the registry. (2) Locating qualified women and minorities and encouraging them to participate in the registry. (3) Educating interested parties on the purpose and most effective use of the registry. The secretary may also prepare and distribute publications designed to promote informed use of the registry.

(q) The Secretary of State may seek registrants' consent to be listed in a published directory of women and minorities eligible to serve as corporate directors, which will contain a summary of each listed registrant's qualifications. The secretary may periodically publish, or cause to be published, such a directory. Only those registrants who so consent in writing may be included in the directory. The printed directory shall be provided to any person upon payment of a fee, which the Secretary of State will determine by regulation, in consultation with the Senate Commission on Corporate Governance, Shareholder Rights, and Securities Transactions.

(s) At least once in each three-year period during which the registry is available for corporate use, the Secretary of State, in consultation with the Senate Commission on Corporate Governance, Shareholder Rights, and Securities Transactions, shall report to the Legislature on the extent to which the registry has helped women and minorities progress toward achieving parity in corporate board appointments or elections.

=======

There is no reason for the existence of this registry other than for corporations to access it in order to specifically seek out minority and women board members based upon their race and/or gender, so that diversity on their respective boards can be attained.

Now, if preferential selection of a corporation's board members were illegal under Unruh, then this section of the Corporations Code would be directly encouraging and abetting California Corporations in breaking the law. The fact that 318 pertains to for-profit corporations is irrelevant, since Unruh does not mention corporations at all, and therefore pertains equally to both for- profit and non-profit corporations, and hence if preferential board selection is not illegal under Unruh for for-profits, it would not be illegal for non-profits.

I should add here that there is a subtle difference between a corporation deliberately and preferentially seeking out women and minorities for its board, as encouraged by Section 318, and a corporation setting an absolute quota on how many people of color and how many women should be on its board. But even with diversity quotas, if there are insufficient candidates of color or women candidates, a violation of the quotas is allowed. And, if necessary, we could further reduce the difference between the behavior encouraged by 318 and Pacifica's diversity mechanisms by requiring the use of a threshold that would prevent promotion of candidates based upon diversity criteria unless they had a certain minimum level of voter support.

But even without such a mechanism, Section 318 strongly suggests that race- and gender-based discrimination in the hiring of a corporation's board members for the purpose of attaining diversity is not against the law, and hence strongly implies that the use of diversity adjustments as one means for attaining that goal would not be illegal.

Finck goes on to state that he has not had sufficient time to review the matter, but his "preliminary" assessment suggests that we "could" lose government grants and funding. The only argument that he makes for this is that Pacifica could be asked to certify that it is in compliance with equal employment opportunity regulations, and that diversity quotas, "even if unrelated to employment, could be interpreted to contradict any certification that Pacifica may make with regards to its commitment or compliance with equal opportunity laws and regulations," or at least might create the "appearance of impropriety" or spark an "undesired audit."

What puffery. "Could," "might," etc. Why say anything if what one actually knows is nothing? What is the likelihood that we will be found to be out of compliance with employment opportunity regulations based upon diversity requirements that have no direct impact upon employment, and whose indirect impact is to help to ensure non-bias by ensuring that all groups attain representation on our boards? Once again I ask: What are we paying this guy to do, besides wave frightening, but unproven and unlikely, possibilities in our faces and say "boo?"

He goes on to admit that "neither the IRS' application for recognition of exemption nor Section 501(c) (3) of the Internal Revenue Code specifically address the issue of equal opportunity as a criteria for exemption status," which would be fair enough if it were not "spun" once again in a way intended to frighten us away from employing diversity. And then, he really loses all sense of balance by citing the Bob Jones case as pertinent. Bob Jones University had the overtly racist policy of expelling any of its students who engaged in interracial dating or marriage. That is, the direct services that it was providing to the public, for which it was granted its tax advantages, were withheld from those who engaged in interracial dating or intermarriage. Once again, none of Pacifica's "services" are being withheld based upon race or gender under diversity quotas. Only the opportunity to serve on Pacifica's boards is affected by such criteria. Nobody sued Bob Jones because it had selected an all-white or an all-Protestant board of directors. The comparison of Pacifica using diversity criteria for its board elections to the racist admission policies of Bob Jones U. is noxious and unjustified.

There is one point on which I partially agree with Mr. Finck. That is where he states that: "We strongly recommend that further research in this area take place, if contrary to our recommendations, the Board decides to further pursue the institution of the proposed racial and gender quotas."

There's just one problem with that. Why only if the Board decides to pursue quotas? Shouldn't we research this in order to determine whether there is truly any obstacle to our pursuing such quotas? With so little of substance to go on from Mr. Finck, we definitely need to find another lawyer who is willing to research this topic for Pacifica. Someone who understands and honors the importance of diversity to Pacifica, instead of someone who works to find any flimsy excuse that he can to remove it.

Carl


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