NEW YORK (Legal Newsline) - Shareholders can be upset that Ben & Jerry's chose to boycott Israel but that doesn't mean they can sue its parent company.
That's the sentiment of Unilever, which says in a Dec. 15 motion to dismiss securities class action litigation that it was unwillingly thrown into a political debate when the ice cream company, which it purchased in 2000, announced its boycott.
It also says the only statements plaintiffs are pointing at actually show it adequately disclosed the risks of the boycott to investors.
"Finding nothing, and without any confidential witnesses in support, Plaintiffs ultimately grasp onto certain high level Unilever risk disclosures relating to customer, ethical and legal risks that Unilever faced," says the motion, filed in New York federal court.
"These risk disclosures did precisely what they intended; they adequately warned investors of the risks facing the company."
The litigation is led by Robbins Geller, who was picked by Judge Lorna Schofield on Aug. 31 to serve as lead counsel. The Westchester Teamsters Pension Fund is lead plaintiff.
The suit was brought over a drop in the consumer goods company's stock price. It alleges leadership at the company misled investors by not disclosing the truths regarding ice cream company Ben & Jerry's, which Unilever bought for $326 million in 2000.
The proposed class action seeks to represent everyone who bought a Unilever American Depositary Receipt between Sept. 2, 2020, and July 21, 2021.
In July 2020, Ben & Jerry's board passed a resolution to boycott Israel, apparently a part of the boycott, divestment and sanctions (BDS) movement against Israel. That decision took effect July 19, 2021.
Anti-BDS legislation has been passed in 35 states, the suit says.
"The consequences for a company violating Anti-BDS Legislation range from the company being barred from contracting with the state to having the state divest its investments in the boycotting company, thereby driving down the price of the company’s stock and, in the case of the company’s bonds, driving up the company’s borrowing costs," the suit says.
"Unilever thus had ample reason to conceal the B&J Board resolution and thereafter to mischaracterize it once Unilever’s hand-selected CEO finally 'operationalized' it."
Unilever's motion says the plaintiffs had realized the company had no duty to publicly disclose the resolution and that plaintiffs can't point to the boycott as a reason for any financial troubles.