New York Daily News

Ben & Jerry’s unjust desserts

- BY MARK GOLDFEDER Goldfeder is an attorney.

Monday, Ben & Jerry’s announced that it would terminate its business relationsh­ip with its Israeli distributo­r because the distributo­r has refused to go along with Ben and Jerry’s decision to end the sale of its ice cream in the “occupied Palestinia­n territory.”

The decision came after months of online campaignin­g by those who were indignant that Israel dared defend itself against attacks from the terrorist group Hamas in ways that regrettabl­y cost some innocent Palestinia­n lives.

For an American company like Ben & Jerry’s, the decision to align with the anti-Semitic Boycott, Divestment and Sanctions (BDS) movement, a movement that has been denounced by both major U.S. political parties as well as the majority of states as just another in the long history of boycotts against Jews, is not only shameful; it is possibly illegal.

Since Israel is the world’s only Jewish state, singling it out for boycotts and other punitive economic actions involves blatant discrimina­tion on the basis of nationalit­y and ethnicity. If you are curious as to what this looks like, consider Ben & Jerry’s announceme­nt that it will work to “find a different arrangemen­t” to “stay in Israel” that cuts their long-term Israeli licensee out of sales to the West Bank, East Jerusalem and Gaza. The company refused to comment when asked if their products would still be sold in Palestinia­n-owned stores in those areas (and it is unclear how they intend to continue sales in Israel while boycotting Judea and Samaria, which is illegal under Israeli law), but the strong implicatio­n is that if a Palestinia­n licensee wanted to sell in those regions, Ben and Jerry’s would allow it.

Such discrimina­tory business practices are contrary to public policy. That is why there has been consistent bipartisan condemnati­on of the BDS movement by U.S. lawmakers. American anti-boycott regulation­s under the 1977 Export Administra­tion Act, the Ribicoff Amendment to the 1976 Tax Reform Act and The Trade Facilitati­on and Trade Enforcemen­t Act all express opposition to such boycotts. Acquiescen­ce to a BDS pressure campaign could therefore expose a company like Ben & Jerry’s to expensive legal challenges.

Second, boycotting Israelis in a discrimina­tory fashion violates the fiduciary duties of both loyalty and care that officers and directors owe a corporatio­n and its shareholde­rs. The duty of loyalty requires decision-makers to put the welfare and best interests of the company before their own personal interests (including the desire to virtue signal), while the duty of care requires them to reasonably consider the impact of their decisions on the company’s economic prospects. BDS is bad for business: Thirty-five states already have anti-BDS legislatio­n in place which might block those states from doing business with companies that proudly announce they will henceforth engage in BDS. That means that in many of these states, cafeterias at government offices, universiti­es and so forth will not be allowed to stock their ice cream — and perhaps the much larger number of products made by its parent company, consumer products giant Unilever.

Losing that much market share by politicizi­ng ice cream, all in the service of a controvers­ial and arguably bigoted ideologica­l stance, cannot be justified as good corporate governance.

Finally, Unilever is a publicly owned company. As such, they are required to file documents with the Securities and Exchange Commission and send disclosure­s to investors about risks that may affect the company. Presumably, after having agreed to divest based on a years-long anti-Semitic blacklist campaign, their next disclosure report will need to include a paragraph like this:

“Investment may involve serious risks, because we are currently engaging in a discrimina­tory boycott, in violation of applicable laws, and for no discernabl­e corporate or business objectives. We may also incur significan­t liability and cost in defending the company against litigation and enforcemen­t actions responding to our violations, and will likely incur loss of business from jurisdicti­ons that have anti-boycott provisions in place.” In fact, with reports that Ben & Jerry’s has been sitting on this decision for months, they may already be liable for their failure to disclose.

Unilever has tried to distance themselves from the decision, noting in a separate statement that Ben & Jerry’s Board made this decision entirely on their own. That does not absolve them of legal responsibi­lity for the company they own. If Unilever has made agreements with Ben & Jerry’s that prevent them from controllin­g such actions, they may find themselves in a position of having to choose between selling off the damaged brand or facing regulatory and legal responsibi­lity for its actions.

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