I expect that most of you immediately spotted the absurdities. However, let me try to provide some structure for your communications to the School Board about that potential lawsuit, both principled and pragmatic.
The foundation of the lawsuit is that members of a racial group are so much like each other and so different from members of other racial groups that they need to be treated as a group, not as individuals. (This is a long-established argument and marks some "political fault lines"). The letter threatening the lawsuit argues against itself. It cites the controversy over naming a school after Fred Yamamoto as representing "racial polarization". But wait! That polarization was essentially between Chinese-Americans and Japanese-Americans, and Asian vs Asian is not racial (in the sense of the lawsuit).
(Clarification/emphasis: "not racial" means not INTER-racial -- this instance is INTRA-racial -- because the threatened lawsuit specifies "Asian" as a race)
And within supposed ethnicities, there are great differences, for example Chinese with roots in Beijing vs. those from Taiwan, or Shanghai vs. Hong Kong vs. Guangdong (or so I am told). Similarly for the many regions of India, Southeast Asia, ... Don't spend too much time on this or you will get the "polarization" down to the level of individuals.
If the principles don't convince you, let's look at the practical details.
The School Board has 5 seats, so each district would have 20% of Palo Alto's population. Accord to the news article, Latinos are 7% of the city's population. So even if you managed to relocate all Latinos into one district, under racialized voting, a Latino candidate would lose in a humiliating landslide. So having districts would do nothing about the purported dilution of Latino votes, and could emphasize race in voting, making it harder for Latinos to get elected.
Question: Why are 5 winner-take-all elections more likely to be influenced by smaller groups than an election for 2 or 3 positions where the candidates have more flexibility in creating coalitions?
As to the claim that Asians have trouble getting elected, 2 of the current 9 City Council members are Asian-Americans: 22% vs 31% of residents (citizens, permanent residents, ...). And since both will be on next year's 7-member Council, that is 29%.
Rhetorical question: How would a districting scheme handle families with parents from different races? According to the theory underlying the lawsuit, a couple that is White and Asian would be simultaneously advantaged and disadvantaged by our at-large elections.
One of the common results of districts is that its representative is accorded outsized influence on what happens in that district. For example, San Jose City Council members run "mini City Halls". So what would be the effect of dividing PAUSD into 5 districts. Three wouldn't have a high school. Two wouldn't have a middle school. If a family lives in one of these districts but their child goes to school in another district, who should they approach with problems? The representative that they vote for, or the representative who has primary responsibility for their child's school. Or would both point them at the other?
Since Palo Alto would likely continue to have staggered elections for School Board members -- so they don't all turn-over at the same time -- we would have elections where 40% or 60% of the electorate would have no influence on the result. This could produce a School Board that has less need to be responsive to the residents.
It would be interesting if the School District lawyers could find a way to file a complaint against that law firm for trying to extort the PAUSD to commit an illegal act (casting districting as racial discrimination). However, this law firm as gone after enough other municipalities and school districts that I presume that they would have considered this (plus a pattern of extortion falling under the ^RICO Act^). But since I and most of you aren't lawyers, that would only be wild speculation, and not suitable for discussion here.
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