Texas State Comptroller Glenn Hegar announced that he has directed his staff to review whether Ben & Jerry’s or its parent company Unilever has violated the state’s “boycott Israel” laws. Under Chapter 808, Texas companies are barred from refusing, terminating business or taking “any action that is intended to penalize, inflict economic harm on or limit commercial relations” with Israel. The law however is primarily focused on divesting from such companies as opposed to a real boycott as suggested by some figures to stop sales of the ice cream.
What is interesting is that the Chapter includes a ban on any constitutional, contractual, or regulatory lawsuit for losses under this ban.
808.004. NO PRIVATE CAUSE OF ACTION. (a) A person, including a member, retiree, or beneficiary of a retirement system to which this chapter applies, an association, a research firm, a company, or any other person may not sue or pursue a private cause of action against the state, a state governmental entity, a current or former employee, a member of the governing body, or any other officer of a state governmental entity, or a contractor of a state governmental entity, for any claim or cause of action, including breach of fiduciary duty, or for violation of any constitutional, statutory, or regulatory requirement in connection with any action, inaction, decision, divestment, investment, company communication, report, or other determination made or taken in connection with this chapter.
We have previously discussed the serious constitutional issues raised by these laws. As will come as little surprise to many on this blog, I oppose such government requirements imposed on individual contractors and employees as inimical to free speech, a view shared by various federal courts. I have the same concerns over the arrest of protesters in other countries like France.
This has nothing to do with the merits of the the boycott, divestment and sanctions (BDS) or its opposition. Requiring contractors and employees to pledge that they will not support the BDS movement contravenes core free speech values. Ironically, many of these same politicians support corporate free speech rights in cases like Citizen’s United but want punish companies who disagree with them to be punished.
I have no problem with private boycott calls, which is an exercise of free speech. People have a right to speak through their purchases when a company takes official positions like this on major controversies. Thus, politicians have called for people to stop buying the ice cream and New York City Mayor Bill de Blasio, said he would be forgoing “Cherry Garcia for a while.”
An actual state boycott could raise serious constitutional questions in interfering with interstate commerce and free speech. However, states have a right to be market participants. In Reeves, Inc. v. Stake, the Court noted:
“The basic distinction drawn in Alexandria Scrap between States as market participants and States as market regulators makes good sense and sound law. As that case explains, the Commerce Clause responds principally to state taxes and regulatory measures impeding free private trade in the national marketplace. There is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market….
Restraint in this area is also counseled by considerations of state sovereignty, the role of each State “as guardian and trustee for its people,” and “the long recognized right of trader or manufacturer, engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.” Moreover, state proprietary activities may be, and often are, burdened with the same restrictions imposed on private market participants. Evenhandedness suggests that, when acting as proprietors, States should similarly share existing freedoms from federal constraints, including the inherent limits of the Commerce Clause. Finally, as this case illustrates, the competing considerations in cases involving state proprietary action often will be subtle, complex, politically charged, and difficult to assess under traditional Commerce Clause analysis. Given these factors, Alexandria Scrap wisely recognizes that, as a rule, the adjustment of interests in this context is a task better suited for Congress than this Court.”
However, in a true official boycott, the state is seeking to bar others from buying products from a specific company due to its political stance. If the boycott is on state purchases or sales on state property, that would come closer to a market participant rather than market regulator model.
The better approach is state officials to speak to their fellow citizens in using their market individual power as opposed to dictating what ice cream can be purchased in the state. The company understood that it was triggering such a response when it made this the official position of the company as opposed to the view of individual corporate officers or owners. That is the distinction between this boycott and those directed against companies like Chick-fil-a for the views of individual owners.