Ben & Jerry’s has gone cold on Israel, but could their master plan prove half-baked?

28 Jul 2021

Last week, the ice-cream brand powerhouse Ben & Jerry’s announced that it will no longer sell its products in the “Occupied Palestinian Territories,” citing an inconsistency with the company’s values. This decision has been touted as another success for the Boycott, Divestment, Sanctions (BDS) movement which has gained momentum since its inception in 2005 with the stated aim to apply international economic pressure to Israel to end what it describes as Israeli occupation and colonization of Palestinians and Palestinian land.

While Ben & Jerry’s announcement has undoubtedly sparked a range of reactions on the socio-political front, including a denouncement by Israeli’s new Prime Minister Naftali Bennet who warned of “serious consequences”, it has also triggered the possibility of legal consequences in the United States for the ice-cream subsidiary and its parent company, Unilever. The legal hook comes in the form of anti-BDS laws, executive orders, or resolutions which have been adopted in 35 states over the past several years. These laws incorporate various sanctions for companies that decide to participate in the BDS movement, ranging from requiring state governments to pull their pension fund investments from firms that boycott Israel to ceasing business relations with such companies.

The bite of these state legislation is also not lost on Israel. As a response to Ben & Jerry’s announcement, Israeli Ambassador to the United States, Gilad Erdan, was quick to rely on these laws, penning letters to all 35 governors to remind them of the “potential legal ramifications” available in their respective state. Five states – Florida, Texas, New York, Illinois, and New Jersey – have answered the call for action and have already begun contemplating steps against Ben & Jerry’s and/or Unilever under these laws.

While powerful, the state anti-BDS laws are not the only legal tool in the US arsenal, and it is possible that Ben & Jerry’s and Unilever could also find themselves defending lawsuits in state and federal courts. This was the case in 2018, when Airbnb announced that it would remove West Bank settlement listings from its website. The rental company giant subsequently faced multiple lawsuits, including for violations of anti-discrimination provisions in federal and state fair housing laws as well as violations of civil rights laws and unfair competition laws. The cumulative effect of its various litigations in the United States and in Israel, coupled with state threats to withdraw investments, forced Airbnb to ultimately reverse its decision and settle with litigants.

Is the Airbnb episode a tale of things to come for Ben & Jerry’s?

Perhaps but not it is not a perfect predictor. Although we can expect to see states begin triggering or discuss triggering their state anti-BDS laws, their effect may weigh differently for Ben & Jerry’s than Airbnb. For example, when Airbnb’s announced its policy in 2018, it was met with threats by Florida governor Ron DeSantis to disallow government employees to stay at an Airbnb while on business travel. As Ben & Jerry’s is in the business of selling ice-cream rather than accommodations, a similar pressure to cease governmental contracts may not be as significant for the brand’s balance sheet. Additionally, discrimination claims under the Fair Housing Act would be inapplicable to Ben & Jerry’s. Instead, lawyers will need to look at different avenues as there is no equivalent anti-discrimination provisions for goods.

However, it may still be a “rocky road” for Ben & Jerry’s as the implications of being removed from state employee pension funds may be hard to overcome. Typically, anti-BDS state pension laws apply to both parent and affiliate companies and would, therefore, include Unilever in potential liability and sanctions. According to Bloomberg data, Florida, Texas, New Jersey, Arizona, Illinois and Mississippi all have pension funds invested in Unilever and have laws on the books requiring them to divest their pension funds from companies that participate in BDS. In this way, Unilever could stand to lose a substantial amount of money – a reality the company seems to be aware of given their efforts to distance themselves from their subsidiary’s decision.

There is no doubt that Ben & Jerry’s latest announcement has put into motion a legal process that will once again pressure the company to reconsider whether it will decide to move forward, reverse or amend its decision.

Article written by: Natasha Pereira,  US Dispute Resolution Solicitor at Asserson and Syvanne Aloni 

Asserson’s US Dispute Resolution practice is well-equipped to handle legal disputes involving BDS and anti-Semitism. For more information about our work please visit asserson.co.uk/p/u-s-disputes.