National Center for Public Policy Research
August 17, 2016
RALEIGH – At an annual meeting of Red Hat shareholders held in Raleigh, North Carolina last Thursday (August 11th), the National Center for Public Policy Research asked management for the legal rationale behind the company’s argument that assigning sex based on physiology constitutes illegal “sex discrimination” under federal law.
North Carolina passed a law, known as HB2, determining that public restrooms, locker rooms and shower facilities, including some in educational settings, should be used by individuals based on their biological sex. The U.S. Department of Justice (DOJ) has gone to federal court to argue the law should be thrown out because assigning sex by biology constitutes illegal “sex discrimination.”
The DOJ is arguing that under the 1964 Civil Rights Act, the 1972 Education Act Amendments and the 2013 Violence Against Women Act, assigning a person a sex based on their physiology constitutes illegal sex discrimination.
Danhof asked the Red Hat management:
This case is about much more than diversity. This is a question about law.
Is it the position of Red Hat’s management that Congress, when it voted for the 1964 Civil Rights Act and the 1972 Education Act Amendments, intended “sex” to be a mental state or belief about one’s sex not necessarily related to biology or physiology?
Or is it the position of Red Hat’s management that Congress, when referring to sex in 1964 and 1972, meant the term to refer to biological males and females, and that the definition of “sex” in federal law has simply changed over the years?
If the definition of “sex” has changed, how did it change in federal law without Congress voting to change it and no federal court ruling redefining it?
Or is it the position of Red Hat that the executive branch can change the core meaning of federal laws all by itself?
In response, Red Hat CEO James Whitehurst largely deferred to the company’s general counsel, Michael Cunningham.
Company executives claimed that they signed the brief based on public policy reasons, fearing that HB2 would lead to discrimination. Cunningham then tried to parse the legal procedure of the case by stating that the company signed onto a brief supporting an injunction on HB2 until the full case on the merits is litigated – and that the company didn’t necessarily back DOJ’s full lawsuit.
“I pressed Red Hat’s executives on the claim that they only signed a brief supporting an injunction. I pointed out that this was a distinction without a difference since the brief that Red Hat signed and the DOJ’s brief on the merits apply the same logic and much of the same legal principles. At that point, Cunningham conceded that the company did support the DOJ’s primary position regarding HB2 and thought the law should be overturned,” noted Danhof.
“I left the meeting with the sense that the company is fully supporting the Obama Administration’s effort to rewrite federal law and that it somehow thinks the DOJ is justified in this extra-Constitutional action,” said Danhof. “So I warned Red Hat’s executives that they are supporting a potentially precedent-setting case with ramifications far beyond North Carolina’s HB2 law – and that in the future they should take a much more earnest look at all the issues before getting involved in legal cases that have almost nothing to do with the company’s operations.”
The core of the Department of Justice’s case is that the DOJ can re-define the meaning of “sex discrimination” in the 1964 Civil Rights Act and in Title IX of the 1972 Education Act, two of the most influential civil rights laws ever adopted by Congress. By endorsing the DOJ’s position in the case, Red Hat and the other corporations have explicitly endorsed allowing the executive branch to re-write federal law.
“Does corporate America really believe the executive branch can re-write federal law anytime it wants?” asked Amy Ridenour, chairman of the National Center for Public Policy Research. “Because the companies are arguing either that Members of Congress in 1964 and 1972 intended the word ‘sex’ to refer not to biological men and women but to a fluid definition individuals can change, even repeatedly, or that Congress changed the definition since those laws were passed. But if Congress changed those laws, when did it do so?”
“Red Hat and 67 other major corporations, including Nike, General Electric, American Airlines and United Airlines, IBM, Dow Chemical, Capital One and many others are arguing that the executive branch – that means Barack Obama and soon, presumably, Donald Trump or Hillary Clinton – can change laws anytime he or she wants,” added Ridenour. “All these corporations should be explaining to their shareholders why they have gone to court arguing that the separation of powers laid out in the U.S. Constitution, which says Congress passes the laws and the executive branch enforces them, is no longer in effect, and when and how that change took place.”
“If these 68 corporations and the DOJ prevail in their case and the executive branch does get the power to re-write federal law by itself,” Ridenour concluded, “they had better hope no anti-business politician ever gets elected President of the United States.”
On March 23rd, North Carolina’s legislature passed HB2, formally titled the “Public Facilities Privacy and Security Act,” often called North Carolina’s restroom and shower law. Among other things, the law states that individuals must use public restrooms corresponding with the sex on their birth certificate (transgender individuals can change the sex on their birth certificate after gender reassignment surgery). On May 9th, the Justice Department filed suit seeking to halt the law’s implementation. On July 8th, 68 major corporations, in conjunction with the Human Rights Campaign, filed a legal brief supporting the Justice Department’s position. The trial is tentatively scheduled to start November 14.
“Who uses which public restroom, locker room or public shower facility in the Tar Heel state has nothing to do with Red Hat’s international software business,” added Danhof. “Yet, Red Hat and 67 other major corporations are actively involved in litigation supporting the federal government’s attempt to block North Carolina’s common sense public accommodation law. Unfortunately, many of these corporations probably have no idea what they are really doing is supporting the U.S. Justice Department’s efforts to upend the rule of law and separation of powers.”
“Also, where is all this supposed discrimination? To hear these corporate executives talk or read the words in their legal brief, one would expect widespread news coverage of constant discrimination of transgender individuals across North Carolina. The dearth of such stories speaks truth to these lies of discrimination,” Danhof concluded.
In July, the National Center issued a press release criticizing the 68 companies, including Red Hat, that are working with the Obama Administration to give the executive branch more power in rewriting federal laws. In that release, Danhof noted:
Besides offending the sensibilities of millions of Americans and North Carolinians who don’t wish to have grown men and young girls in states of undress in the same public facility, the Justice Department’s lawsuit seeks to fundamentally alter the rule of law. Obama’s Justice Department has long sought to include self-identified transgender individuals as a protected class under Title VII of the 1964 Civil Rights Act and Title IX of the Education Act Amendments of 1972. Since the DOJ doesn’t have the Constitutional authority to rewrite laws, it is trying to seek the same result by establishing precedent with this court case. Such a result would irreparably damage America’s unique separation of powers and open the floodgates for increased executive branch control over state and local matters.
If the government is going to extend the Civil Rights Act to cover individuals who merely identify as transgender – but choose not to actually change their gender medically or legally – than that’s up to the U.S. Congress. Members of Congress are elected and accountable to the American people. Attorney General Loretta Lynch and her lackeys at the Department of Justice are not. However, publicly-held companies are accountable to their investors and customers. Corporations that want to undermine the American people need to hear from these stakeholders. Every time a corporation even hints at taking a perceived conservative action or position, the liberal activist machine kicks into high gear and attacks that corporation. Conservative and free enterprise-minded folks need to start using the same tactics to go after companies that limit freedom.
“Even if this case was purely about the public restroom, locker room and shower provisions in HB2, Red Hat is making a poor strategic decision. Opinion polls show a plurality of Americans support the law’s commonsense approach requiring men and boys to use the men’s facilities and women and girls to use the women’s facilities when in public places,” noted Danhof. “If Red Hat wants an example of what public backlash can look like for supporting perverse restroom and accommodation policies, it should look to Target Corporation. After announcing that its restrooms and changing rooms were open to anyone based on their subjective identification, the retailer’s stock price and foot traffic to its stores plummeted.”
National Center President David Ridenour is a Red Hat shareholder.
In May, Danhof confronted Pepsi CEO Indra Nooyi after she called for North Carolina Governor Pat McCrory to repeal HB2. While Nooyi defended Pepsi’s position, the company did not join in the Human Rights Campaign legal brief that Red Hat endorsed.
Pepsi is based in New Bern, North Carolina.
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The National Center’s Free Enterprise Project is the nation’s preeminent free-market activist group focusing on shareholder activism and the confluence of big government and big business.