Mind Your Own Business Act would help shareholders sue corporations for “woke” policies and statements
If this passes, going woke could make those companies go broke.
Context
In recent years, but never more so than in 2020–21, many corporations have publicly opposed or spoken out on current political or social issues not specifically related to their business interests — lately almost always against the Republican or conservative side. Republicans derisively call this approach “going woke.”
In 2021 for example, Atlanta-based companies Coca-Cola, Delta Air Lines, and Home Depot publicly opposed their home state Georgia’s new voting and elections law, enacted by Republicans on a party-line vote. Dozens of other major corporations also publicly joined the chorus, including Amazon, Facebook, Ford, GM, JetBlue, Levi Strauss, Lyft, MasterCard, Microsoft, Netflix, Paypal, Peloton, Pinterest, Reddit, Starbucks, Target, Twitter, United Airlines, and ViacomCBS.
And while it’s not legislation, per se, many prominent companies also began using the slogan ‘Black Lives Matter’ — a phrase that, while nonpartisan in its literal meaning, is also the name of a political movement largely within the political left.
In July, ice cream company Ben & Jerry’s attracted global controversy when they announced they would no longer sell their products in the West Bank as a protest against Israel’s occupation of the territory, a viewpoint associated with the political left. Israel has claimed the territory since 1967.
What the legislation does
The Mind Your Own Business Act would make it easier for shareholders to sue publicly traded companies, and especially their executives, for woke policies.
Woke policies are defined as when a company takes action related to laws about elections, religious freedom, abortion, or supports a “divisive concept,” based on a list in former President Donald Trump’s 2020 executive order on the subject. The list of divisive concepts includes the idea “the United States is fundamentally racist or sexist,” and other entries targeting what Republicans lately call critical race theory. But the list is also so broad that some on the left claim it could even support a lawsuit based on the frozen dinner brand name Hungry-Man, because the name makes a stereotyped claim about men being hungrier than women with its slogan “Eat Like a Man.”
The burden of proof would be on the corporation to prove they aren’t being divisive, not on the shareholder plaintiff, and top executives could be made personally liable for the financial payouts to shareholders if they lose. And a corporation couldn’t justify their decisions with ostensibly non-financial rationales, such as preserving or burnishing the company’s public image.
The bill attaches these new requirements to “fiduciary duty,” which roughly requires that corporate directors and officers exercise appropriate judgment when making corporate decisions. Getting rich at the company’s expense is a typical example of breaching fiduciary duty. Generally, having a fiduciary duty requires one to advance a company’s interests, but what is and isn’t in a company’s interests isn’t always clear, and “shareholder primacy” isn’t law. It’s also generally been a matter left to the states to decide, rather than by the federal government.
In other words, the bill would mean shareholders could sue a company for its left-leaning public relations, even if those actions had no effect on the company’s profits or share prices — indeed, even if those actions increased the company’s profits or share prices. It’s essentially redefining “fiduciary duty” to mean something more like “patriotic duty.”
And just one single conservative shareholder could sue a company, even if a majority of shareholders actually wanted those left-leaning public relations.
It was introduced in the Senate on September 23 as S. 2829, by Sen. Marco Rubio (R-FL). This is not to be confused with another Senate bill also named the Mind Your Own Business Act, S. 1444, Democratic legislation dealing with collection of personal consumer information by companies, particularly tech companies.
What supporters say
Supporters argue that corporations should be in the business of supporting America, not trying to divide it from within, as Sen. Rubio and others claim those companies are doing by supporting divisive policies.
“Patriotic Americans who love their country and the opportunity it provides should be able to fight back against the growing tyranny of the woke elites running corporate America,” Sen. Rubio said in a press release. “These are often nationless corporations that amass fortunes divorced from the fate of our great country while pushing socially destructive, far left policies like boycotts and cancel crusades at home.”
The bill “would put the burden of proof on corporations to show that their far left actions were in shareholders’ best interests, and make corporate directors and officers personally liable if they can’t prove it,” Sen. Rubio continued. “No more legal tricks that shield these corporate executives from accountability. If they really believe that being woke is good for business, they should have to say so — and prove it — under oath in court.”
What opponents say
Opponents counter that the bill is about applying political pressure — notably from a Republican who’s likely looking to burnish his right-wing bona fides in anticipation of a possible 2024 presidential run. (Sen. Rubio just visited Iowa in August.)
“It does strike me that Republicans are trying to use every tool they can to strike fear in individual companies because they are losing on the issues themselves,” Rachel Curley, a democracy advocate for the advocacy group Public Citizen, told Roll Call. “I wouldn’t be surprised if they’re trying to spook some companies by suggesting they could face lawsuits from their shareholders.”
Opponents say the bill is especially absurd when a situation arises where Republicans, ostensibly the party of business, would prevent a company’s controversial business decision that nonetheless increases profits. The Atlantic columnist Jemele Hill made this point after Nike signed Colin Kaepernick to an endorsement deal in 2018. “I’m just here to remind folks that last year Colin Kaepernick was in the top 50 in NFL jersey sales, despite not being on a roster,” Hill said. “Nike made a business move.”
Other possible arguments against the bill are that it takes power away from states to define fiduciary duty, that it promotes an outdated view of shareholder primacy, that it restricts corporate speech protected by the First Amendment, and that it creates new regulations for businesses.
Odds of passage
The bill has not yet attracted any cosponsors. It awaits a potential vote in the Senate Banking, Housing, and Urban Affairs Committee. Odds of passage are low in the Democratic-controlled chamber.
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This article was written by GovTrack Insider staff writer Jesse Rifkin.
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