Court Opinion

ID: 4697229
Source: CourtListenerOpinion
Date Created: 2021-06-21 17:00:55.442618+00
Date Added: 2024-06-11T08:05:45.158014
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 CREIGHTON MELAND,                                    No. 20-15762
               Plaintiff-Appellant,
                                                        D.C. No.
                       v.                            2:19-cv-02288-
                                                        JAM-AC
 SHIRLEY N. WEBER,* Secretary of
 State of California, in her official
 capacity as Secretary of State of the                   OPINION
 State of California,
                  Defendant-Appellee.

         Appeal from the United States District Court
             for the Eastern District of California
          John A. Mendez, District Judge, Presiding

             Argued and Submitted March 10, 2021
                  San Francisco, California

                         Filed June 21, 2021

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

                      Opinion by Judge Ikuta

      *
         Shirley Weber has been substituted for her predecessor, Alex
Padilla, as Secretary of State of California under Fed. R. App. P 43(c)(2).
2                        MELAND V. WEBER

                            SUMMARY**

                             Civil Rights

    The panel reversed the district court’s dismissal for lack
of standing of an action brought by a corporate shareholder
challenging the constitutionality of California Senate Bill
826, which requires all public corporations headquartered in
California to have a minimum number of females on their
boards of directors.

    Plaintiff alleged that Senate Bill 826 (SB 826) requires
shareholders to discriminate on the basis of sex when
exercising their corporate voting rights, in violation of the
Fourteenth Amendment. The panel held that plaintiff
plausibly alleged that SB 826 requires or encourages him to
discriminate based on sex. Plaintiff therefore adequately
alleged an injury in fact, the only Article III standing element
at issue, and thus had Article III standing to challenge
SB 826. Plaintiff’s alleged injury was also distinct from any
injury to the corporation, and he could bring his own
Fourteenth Amendment challenge. Thus, plaintiff had
prudential standing to challenge SB 826. Finally, plaintiff’s
injury was ongoing and neither speculative or hypothetical,
and the district court could grant meaningful relief. This case
was therefore ripe and not moot.

    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                    MELAND V. WEBER                       3

                       COUNSEL

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.
4                        MELAND V. WEBER

                              OPINION

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.

    1
      SB 826 added sections 301.3 and 2115.5 to the California
Corporations Code. The text of these sections is set forth in the Appendix.
                    MELAND V. WEBER                         5

(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
6                    MELAND V. WEBER

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.
                     MELAND V. WEBER                           7

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 (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).
8                    MELAND V. WEBER

                               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 (1979).

    Here, Meland bears the burden of establishing the three
“irreducible” elements of Article III standing. Lujan,
504 U.S. at 560. 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, 136 S. Ct. 1540, 1547 (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
(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 (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 (1982). Although
                     MELAND V. WEBER                           9

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 (1970); see also Valley Forge, 454 U.S. at 486 (“[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 required by the government to
discriminate by ethnicity or sex against others has standing to
challenge the validity of the requirement, even though the
government does not discriminate against him.” Monterey
Mech., 125 F.3d at 707. In Monterey Mechanical, a
contractor submitted the low bid on a construction project for
a state university. Id. at 704. Despite submitting the low bid,
the contractor did not get the job, because it did not comply
with a state statute requiring general contractors “to
subcontract percentages of the work to minority, women, and
disabled veteran owned subcontractors, or demonstrate good
faith efforts to do so.” Id. The contractor sued the
university’s trustees on the ground that the statute violated the
Equal Protection Clause. Id. at 705. We held that the
contractor had standing because, among other reasons, a
plaintiff suffers a personal injury sufficient to confer standing
when the government “requires or encourages” the plaintiff
to discriminate against others. Id. at 707. Because
“Americans view ethnic or sex discrimination as ‘odious,’”
id. (citing Adarand Constructors, Inc. v. Pena, 515 U.S. 200,
214 (1995)), and because “discrimination is wrong even if the
beneficiaries are members of groups whose fortunes we
would like to advance,” we concluded that a plaintiff “is hurt
by a law requiring it to discriminate, or try to discriminate,
10                   MELAND V. WEBER

against others on the basis of their ethnicity or sex,” id. at
707–08.

    We have subsequently relied on Monterey Mechanical’s
determination that a person required or encouraged to
discriminate on the basis of a protected class, “even if the
beneficiaries [of the discrimination] are members of groups
whose fortunes we would like to advance,” id. at 708, has
suffered a direct personal injury sufficient to confer standing.
In RK Ventures, Inc. v. City of Seattle, for example, we held
that the principal owners and shareholders of a corporation
that owned a nightclub had standing to sue Seattle because,
among other reasons, Seattle’s “efforts were aimed at forcing
[them] to discriminate against members of [a] protected
class.” 307 F.3d 1045, 1056–57 (9th Cir. 2002); see also
Columbia Basin Apartment Ass’n v. City of Pasco, 268 F.3d
791, 797–98 (9th Cir. 2001) (holding that landlords had
standing to challenge a city ordinance that allegedly
compelled them to violate their tenants’ Fourth Amendment
rights).

    Other circuits have cited Monterey Mechanical with
approval. See, e.g., Safeco Ins. Co. of Am. v. City of White
House, Tenn., 191 F.3d 675, 689 (6th Cir. 1999) (quoting
Monterey Mechanical for the proposition that “[a] person
required by the government to discriminate by ethnicity or
sex against others has standing to challenge the validity of the
requirement, even though the government does not
discriminate against him”); Lutheran Church-Mo. Synod v.
FCC, 141 F.3d 344, 350 (D.C. Cir. 1998) (holding that
“forced discrimination may itself be an injury” and quoting
Monterey Mechanical for the proposition that “[a] person
suffers injury in fact if the government requires or encourages
                    MELAND V. WEBER                        11

as a condition of granting him a benefit that he discriminate
against others based on their race or sex”).

    Therefore, if Meland’s allegations that SB 826 “requires
or encourages” him to discriminate on the basis of sex are
plausible, then he has suffered a concrete personal injury
sufficient to confer Article III standing.

                              B

    California claims that Meland’s allegations are not
plausible, primarily because corporations, not their
shareholders, are the objects of SB 826. California points out
that on its face, SB 826 imposes requirements on specified
corporations, not on shareholders. Therefore, California
argues, Meland has not suffered a concrete, personal injury.

    We disagree, because shareholders are one of the objects
of SB 826 and therefore have standing to challenge it. In
determining whether a plaintiff is the object of a government
enactment, courts consider the purpose of the government
enactment and its practical effect. For instance, where a rule
had the practical effect of requiring truck drivers to install
onboard devices that would monitor their conduct, the
Seventh Circuit concluded that the truck drivers had standing
to challenge the rule, even though on its face the rule
regulated only motor carriers. Owner-Operator Indep.
Drivers Ass’n v. Fed. Motor Carrier Safety Admin., 656 F.3d
580, 585–86 (7th Cir. 2011); see also Stilwell v. Office of
Thrift Supervision, 569 F.3d 514, 519 (D.C. Cir. 2009)
(holding that “when an agency adopts a rule with the purpose
and substantially probable effect” of hindering a particular
party, that party “ordinarily will have standing to challenge
the rule”). When a plaintiff is the actual object of the
12                       MELAND V. WEBER

government’s regulation, then “there is ordinarily little
question that the action or inaction has caused him injury,”
Lujan, 504 U.S. at 561–62, regardless whether the regulation
identifies the plaintiff by name.

    Here, corporate shareholders are an object of SB 826. As
a general rule, shareholders are responsible for electing
directors at their annual meetings. E.g., Cal. Corp. Code
§§ 301(a), 600(b). OSI is no exception. Thus, the only way
a person can be elected to OSI’s board is if a plurality of
shareholders vote in favor of the nominee at an annual
shareholder meeting. OSI itself has no authority to elect its
own board members. For SB 826 to hasten the achievement
of gender parity—or indeed, for SB 826 to have any effect at
all—it must therefore compel shareholders to act.
Accordingly, the California Legislature necessarily intended
for SB 826 to require (or at least encourage) shareholders to
vote in a manner that would achieve this goal.

    California next argues that even if shareholders must act
to nominate directors, nothing in SB 826 requires any
individual shareholder to vote for a female nominee.2 This

     2
       California also suggests that SB 826 does not require Meland to
make a discriminatory decision because board candidates are typically
nominated by OSI’s nominating committee, and the committee will ensure
that the slate of candidates complies with SB 826. At this juncture,
however, we “must accept as true all material allegations of the complaint,
and must construe the complaint in favor of the complaining party.” See
Warth v. Seldin, 422 U.S. 490, 501 (1975). The complaint does not allege
that OSI’s nominating committee has exclusive control over the slate of
board candidates or that the number of candidates included in the slate
always matches the number of available board seats. To the contrary,
Meland alleges that shareholders, or groups of shareholders, may submit
names of candidates for election to the board, an allegation that
undermines California’s suggestion. Accordingly, we do not consider
                         MELAND V. WEBER                               13

argument fails, because SB 826 necessarily requires or
encourages individual shareholders to vote for female board
members. A reasonable shareholder deciding how to vote
could not assume that other shareholders would vote to elect
the requisite number of female board members. Therefore,
each shareholder 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. At a minimum, therefore, SB 826 would
encourage a reasonable shareholder to vote in a way that
would support corporate compliance with legal requirements.
Indeed, the California Legislature must have concluded that
SB 826 would have such an effect on individual shareholders;
otherwise, if each individual shareholder felt free to vote for
a male board member, SB 826 could not achieve its goal of
reaching gender parity. And the legislative conclusion that
most shareholders would comply with SB 826’s mandate was
reasonable, as early results have shown.3 In short, “it strikes
us as odd that” the California Legislature enacted coercive
legislation to achieve gender parity, “but at the same time it
is asserting that these rules are not meant to change [any
shareholder’s] immediate behavior enough to confer standing

California’s argument, which is unsupported by the pleadings, at this stage
of the proceedings.
    3
      See, e.g., Allison Levitsky, Women Now Hold More Than 1 in 4
Public Company Board Seats in California, Silicon Valley Business
Journal (May 4, 2021), https://www.bizjournals.com/sanjose/news/202
1/05/04/women-sb-826.html (“Women now hold 26.5% of public
company board seats in California, a direct result of a law passed in
2018—Senate Bill 826—that has nearly quadrupled the rate of companies
adding women to their boards, according to a new report from the
California Partners Project.”).
14                       MELAND V. WEBER

to challenge” the law. Owner-Operator Indep. Drivers Ass’n,
Inc., 656 F.3d at 586.

    California’s argument that SB 826 does not require a
shareholder to discriminate, because the law does not impose
monetary sanctions directly on shareholders, also fails. A law
may require or encourage action whether or not it imposes a
monetary sanction for noncompliance. Indeed, “it would
strain credulity” to hold that a government enactment
requiring a regulated entity to change its practices “does not
require action immediately enough to constitute an
injury-in-fact,” whether or not a monetary sanction is
imposed. Texas v. Equal Emp. Opportunity Comm’n,
933 F.3d 433, 448 (5th Cir. 2019). Again, the state
Legislature must have concluded that imposing sanctions on
corporations would require—or at least
encourage—shareholders to vote for female nominees;
otherwise, the enactment would have been futile. One reason
imposing monetary sanctions on a corporation may coerce
shareholders is because such sanctions affect a shareholder’s
ownership interest in the corporation. See Franchise Tax Bd.
of Cal. v. Alcan Aluminium Ltd., 493 U.S. 331, 336 (1990)
(holding that parent corporations (i.e., shareholders) may
have Article III standing to challenge taxes imposed on
subsidiaries, because “[i]f those taxes are higher than the law
of the land allows, that method threatens to cause actual
financial injury” to the shareholders “by illegally reducing the
return on their investments [in the subsidiaries] and by
lowering the value of their stockholdings”).4

     4
      SB 826 pressures shareholders in other ways as well. Meland
alleges that SB 826 also enforces its requirements through “public
shaming” by requiring the California Secretary of State to publish lists of
                      MELAND V. WEBER                          15

    We conclude that as a shareholder of OSI, Meland is
subject to the coercive effect of SB 826. In order to keep OSI
in compliance with California law and avoid potential
monetary sanctions (and alleged public shaming), Meland has
alleged that he is required or encouraged to make
discriminatory decisions in voting for board members. See
Monterey Mech., 125 F.3d at 707. As Meland put it in his
complaint, if SB 826 is declared unconstitutional and the state
is enjoined from enforcing it, then Meland “would no longer
have to worry that he might subject OSI to fines unless he
considers sex when selecting a board member.” Alleging this
kind of injury is “all that is required for Article III standing.”
Alcan Aluminium Ltd., 493 U.S. at 336. Therefore,
construing “all material allegations of fact in the complaint in
favor of the plaintiff,” Southcentral Found., 983 F.3d at
416–17, we hold that Meland has adequately alleged that he
has Article III standing here.

                               III

   We now turn to California’s argument that Meland’s
§ 1983 claim was properly dismissed because, under state
law, he has brought a derivative shareholder claim and lacks
prudential standing as a matter of federal law.

    Under the Supreme Court’s prudential standing rule, a
“plaintiff generally must assert his own legal rights and
interests, and cannot rest his claim to relief on the legal rights
or interests of third parties.” Alcan Aluminium Ltd., 493 U.S.

compliant and noncompliant corporations.    See Cal. Corp. Code
§ 301.3(c)–(d).
16                       MELAND V. WEBER

at 336 (quoting Warth v. Seldin, 422 U.S. 490, 499 (1975)).5
In the corporate context, “shareholders do not have standing
to assert the claims of the corporation, unless they do so
through derivative actions.” Coto Settlement v. Eisenberg,
593 F.3d 1031, 1037 (9th Cir. 2010). If a shareholder has “a
direct, personal interest” in his cause of action, however, then
the claim is not derivative and thus there are no prudential
standing concerns. Alcan Aluminium Ltd., 493 U.S.
at 336–37.

    To determine whether a plaintiff’s claim is direct or
derivative, we apply the law of the state of incorporation,
Lapidus v. Hecht, 232 F.3d 679, 682 (9th Cir. 2000), because
the “presumption that state law should be incorporated into
federal common law is particularly strong” in the corporate
context, Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 98
(1991). OSI is incorporated in Delaware. Under Delaware
law, whether an action is direct or derivative depends on
“whether the stockholder has demonstrated that he or she has
suffered an injury that is not dependent on an injury to the
corporation.” Tooley v. Donaldson, Lufkin & Jenrette, Inc.,
845 A.2d 1031, 1036 (Del. 2004).

    Meland’s action is direct, and therefore he has prudential
standing to bring his claims, because Meland alleges that he
has been personally injured by an allegedly unconstitutional

     5
       In recent years, the Supreme Court has cast some doubt on
prudential standing rules as being “in some tension” with a federal court’s
“virtually unflagging” obligation to “hear and decide cases within its
jurisdiction.” Lexmark Int’l, Inc. v. Static Control Components, Inc.,
572 U.S. 118, 126 (2014) (cleaned up). But Lexmark did not address third
party standing, which “continues to remain in the realm of prudential
standing.” Ray Charles Found. v. Robinson, 795 F.3d 1109, 1118 n.9 (9th
Cir. 2015).
                        MELAND V. WEBER                              17

law. See Monterey Mech., 125 F.3d at 707. Meland asserts
his own rights, not the rights of OSI, because he alleges that
SB 826 requires or encourages him “to discriminate against
other persons” in violation of the Fourteenth Amendment.
See id. at 708. And the injury that Meland alleges is not
“dependent on an injury” to OSI, because Meland has not
alleged an injury to OSI. In a similar context, we held that
principal owners and shareholders who were compelled to
discriminate on the basis of race had prudential standing to
bring a § 1983 action raising Fourteenth Amendment claims
(among others) on their own behalf. See RK Ventures,
307 F.3d at 1057.

    The state claims that Meland lacks prudential standing
because he is alleging a harm to OSI based on fines that may
be imposed on OSI if OSI fails to comply with SB 826 in the
future. But Meland’s complaint does not allege that SB 826
violates the constitutional rights of OSI. Nor does Meland
allege that OSI has been injured by SB 826. Rather, Meland
alleges that SB 826 seeks to force him, as a shareholder, “to
perpetuate sex-based discrimination.” Thus, because Meland
rests his right to relief on an injury to himself rather than OSI,
his claim is direct rather than derivative, and there are no
prudential standing concerns under federal or state law.6 See
Tooley, 845 A.2d at 1035–36.

                                  IV

    Finally, we reject the state’s alternative grounds for
affirmance, not addressed by the district court, that this case

    6
      We do not address at this stage whether Meland has alleged a
cognizable constitutional claim. That issue is for the district court on
remand.
18                       MELAND V. WEBER

is unripe and moot. “To qualify as a case fit for federal-court
adjudication, an actual controversy must be extant at all
stages of review, not merely at the time the complaint is
filed.” Arizonans for Official Eng. v. Arizona, 520 U.S. 43,
67 (1997) (citation and internal quotation marks omitted).
Ripeness and mootness both consider whether a plaintiff
meets this standing requirement at all points during the
litigation; indeed, both have been referred to as “standing on
a timeline.” Thomas v. Anchorage Equal Rts. Comm’n,
220 F.3d 1134, 1138 (9th Cir. 2000) (en banc); see also U.S.
Parole Comm’n v. Geraghty, 445 U.S. 388, 397 (1980). “The
central concern of the ripeness inquiry is whether the case
involves uncertain or contingent future events that may not
occur as anticipated, or indeed may not occur at all.”
Richardson v. City & County of Honolulu, 124 F.3d 1150,
1160 (9th Cir. 1997) (cleaned up). The central question for
mootness is “whether changes in the circumstances that
prevailed at the beginning of litigation have forestalled any
occasion for meaningful relief.” Ctr. For Biological
Diversity v. Lohn, 511 F.3d 960, 963 (9th Cir. 2007) (citation
omitted). Plaintiffs bear the burden of proving that their
claim is ripe, see Colwell v. Dep’t of Health & Human Servs.,
558 F.3d 1112, 1121 (9th Cir. 2009), and defendants bear the
burden of establishing that a case is moot,7 Lohn, 511 F.3d
at 963.

     7
       The state also argues that this case is moot under the doctrine of
prudential mootness, meaning that the case may become moot in the
future even if it is not technically moot at this time. In light of a federal
court’s “virtually unflagging” obligation to “hear and decide cases within
its jurisdiction,” Lexmark, 572 U.S. at 126 (quotations omitted), we
decline to dismiss a live controversy as moot because it could become so
in the future. Cf. Hunt v. Imperial Merch. Servs., Inc., 560 F.3d 1137,
1142 (9th Cir. 2009) (noting that “some of our sister circuits” have
adopted the doctrine of prudential mootness but declining to apply it).
                     MELAND V. WEBER                         19

    There is no ripeness or mootness issue here, because
Meland’s injury is not “conjectural or hypothetical,” Lujan,
504 U.S. at 560 (quotations omitted), and a ruling in
Meland’s favor can give him meaningful relief. Meland’s
alleged injury, as recognized by Monterey Mechanical and
RK Ventures, is being subjected to a law that requires or
encourages him to discriminate based on sex. That injury is
ongoing, because OSI’s shareholders are responsible for
electing directors at each annual meeting, Cal. Corp. Code
§§ 301(a), 600(b), and SB 826 continues to require or
encourage them to vote in a discriminatory manner in order
to meet the escalating female-director quota.                Id.
§ 301.3(b)(1)–(3).       Therefore, Meland will “suffer
hardship”—that is, he will continue to be required or
encouraged to discriminate on the basis of sex—if the district
court “decline[s] to consider the issues.” San Diego Cnty.
Gun Rights Comm. v. Reno, 98 F.3d 1121, 1132 (9th Cir.
1996). Because Meland will continue to suffer the alleged
violation of his individual rights, we reject the state’s
argument that this case is moot because OSI is currently in
compliance with SB 826. Meland’s requested relief would
end the requirement or encouragement to vote in a
discriminatory manner, and thus “effective relief can be
granted.” W. Coast Seafood Processors Ass’n v. Nat. Res.
Def. Council, Inc., 643 F.3d 701, 704 (9th Cir. 2011) (citation
omitted).

                             ***

    Because Meland has plausibly alleged that SB 826
requires or encourages him to discriminate based on sex,
Meland has adequately alleged an injury in fact, the only
Article III standing element at issue, and thus has Article III
standing to challenge SB 826. Meland’s alleged injury is also
20                  MELAND V. WEBER

distinct from any injury to OSI, and he can bring his own
Fourteenth Amendment challenge. Thus, Meland has
prudential standing to challenge SB 826. Finally, Meland’s
injury is ongoing and neither speculative or hypothetical, and
the district court can grant meaningful relief. This case is
therefore ripe and not moot.

     REVERSED.
                     MELAND V. WEBER                         21

                          Appendix

SB 826 added sections 301.3 and 2115.5 to the California
Corporations Code. Section 301.3 reads:

(a) No later than the close of the 2019 calendar year, a
publicly held domestic or foreign corporation whose principal
executive offices, according to the corporation’s SEC 10-K
form, are located in California shall have a minimum of one
female director on its board. A corporation may increase the
number of directors on its board to comply with this section.

(b) No later than the close of the 2021 calendar year, a
publicly held domestic or foreign corporation whose principal
executive offices, according to the corporation’s SEC 10-K
form, are located in California shall comply with the
following:

(1) If its number of directors is six or more, the corporation
shall have a minimum of three female directors.

(2) If its number of directors is five, the corporation shall
have a minimum of two female directors.

(3) If its number of directors is four or fewer, the corporation
shall have a minimum of one female director.

(c) No later than July 1, 2019, the Secretary of State shall
publish a report on its internet website documenting the
number of domestic and foreign corporations whose principal
executive offices, according to the corporation’s SEC 10-K
form, are located in California and who have at least one
female director.
22                   MELAND V. WEBER

(d) No later than March 1, 2020, and annually thereafter, the
Secretary of State shall publish a report on its internet website
regarding, at a minimum, information required by subdivision
(c) of Section 301.4 and all of the following:

(1) The number of corporations subject to this section that
were in compliance with the requirements of this section
during at least one point during the preceding calendar year.

(2) The number of publicly held corporations that moved
their United States headquarters to California from another
state or out of California into another state during the
preceding calendar year.

(3) The number of publicly held corporations that were
subject to this section during the preceding year, but are no
longer publicly traded.

(e)(1) The Secretary of State may adopt regulations to
implement this section. The Secretary of State may impose
fines for violations of this section as follows:

(A) For failure to timely file board member information with
the Secretary of State pursuant to a regulation adopted
pursuant to this paragraph, the amount of one hundred
thousand dollars ($100,000).

(B) For a first violation, the amount of one hundred thousand
dollars ($100,000).

(c) For a second or subsequent violation, the amount of three
hundred thousand dollars ($300,000).
                     MELAND V. WEBER                         23

(2) For the purposes of this subdivision, each director seat
required by this section to be held by a female, which is not
held by a female during at least a portion of a calendar year,
shall count as a violation.

(3) For purposes of this subdivision, a female director having
held a seat for at least a portion of the year shall not be a
violation.

(4) Fines collected pursuant to this section shall be available,
upon appropriation by the Legislature, for use by the
Secretary of State to offset the cost of administering this
section.

(f) For purposes of this section, the following definitions
apply:

(1) “Female” means an individual who self-identifies her
gender as a woman, without regard to the individual’s
designated sex at birth.

(2) “Publicly held corporation” means a corporation with
outstanding shares listed on a major United States stock
exchange.

Cal. Corp. Code § 301.3.

    Section 2115.5 reads:

(a) Section 301.3 shall apply to a foreign corporation that is
a publicly held corporation to the exclusion of the law of the
jurisdiction in which the foreign corporation is incorporated.
24                   MELAND V. WEBER

(b) For purposes of this section, a “publicly held corporation”
means a foreign corporation with outstanding shares listed on
a major United States stock exchange.

Id. § 2115.5.