SUED FOR WRONGTHINK?

No More Mister Nice Blog

Friday, July 21, 2023

SUED FOR WRONGTHINK?

I assume this is all for show, though it probably won't be long before corporations are in the dock because Republicans think they're guilty of Wrongthink:

Florida Gov. Ron DeSantis is urging the state’s pension fund manager to consider legal action against Bud Light’s parent company....

In a Thursday letter obtained by CNN, DeSantis suggests AB InBev “breached legal duties owed to its shareholders” when it decided to associate with “radical social ideologies.” Sales of Bud Light have plummeted in the months since it entered into a minor partnership with transgender influencer Dylan Mulvaney that precipitated a boycott from conservatives.

“All options are on the table,” DeSantis wrote, as the state reviews the impact of AB InBev’s recent financial downturn, though it’s unclear what legal recourse the state might have to challenge a multinational corporation’s business decisions.

DeSantis enjoys threatening corporations. We know about Disney. There was also this:

In early 2022, he threatened to hold Twitter shareholders accountable if they didn’t sell the social media company to Tesla CEO Elon Musk.

And this late last year:

The Florida Supreme Court will convene a grand jury at Republican Gov. Ron DeSantis’ request to investigate any wrongdoing with respect to the COVID-19 vaccines, the court announced Thursday.

The Republican governor ... earlier this month called for the investigation. He suggested it would be in part aimed to jog loose more information from pharmaceutical companies about the vaccines and potential side effects.

DeSantis isn't the only Republican who's threatening corporations this way. Recall the letter nine Republican state attorneys general sent earlier this month to Target after the company promoted some pro-LGBTQ merchandise during Pride month. Because the states' pension funds held Target stock, the letter warned that the company had a responsibility not to "improperly direct[...] company resources for collateral political or social goals unrelated to the company’s and its shareholders’ best interests." Like DeSantis's threat to AB InBev, this is probably just tough talk that won't be backed by action, but both threats suggest that if your company pursues social goals Repubicans don't like, and Republicans' own boycotts lower your stock price, Republican officials can take you to court for what they and their allies did to the stock.

I'm assuming Florida won't really sue AB InBev. But who knows? If DeSantis is 15 points behind Trump a couple of weeks before the Iowa caucuses, who's to say his lackeys in the state won't sue?

The theory of this, and of the GOP's crusades against DEI and ESG, is that businesses shouldn't be allowed to pursue social goals that might reduce profits. But let's reverse this. Chick-fil-A stores are closed on Sundays, in accordance with the founder's Christian beliefs. Chick-fil-A is privately owned, so no pension funds holds the company's stock -- but could a liberal state hold stock in a Christian-oriented firm that made similar business decisions and then sue because the decisions cut into profits?

In announcing his threat to AB InBev, DeSantis is assuming that his audience is innumerate.

During a Fox News hit Thursday night, Gov. Ron DeSantis noted that Florida’s pension fund had roughly $50 million in exposure to the pension fund, as the state “overweighted” Bud Light parent company InBev.

“Well, we had over $50 million worth of stock, and Florida’s pension fund’s about $180 billion. So it’s a pretty big endeavor, but it has absolutely hurt teachers, it has absolutely hurt other pensioners,” DeSantis told Jesse Watters.

CNN is more specific:

At the end of March, Florida’s pension fund held more than 682,000 shares of AB InBev valued at the time at nearly $46 million. The company’s stock price has fallen since then from $66 a share to $58....

Let's break that down.

The pension fund is $180 billion. Florida held $46 million in AB InBev stock, which means it constituted approximately .026% of the fund. The stock lost $8 a share; $8/share times 682,000 shares = a $5,456,000 loss. That's something like .0028% of the fund. You're going to sue over that? How much would it cost the state to try to recoup that tiny amount, which is a relatively normal stock loss?

Oh and let's look at that decline in context:

The company’s stock price has fallen since then from $66 a share to $58, though it’s still higher than its 52-week low of $44 from September 2022, which was well before the company’s recent controversies.

So the stock has gained 31% over the last eleven months.

This seems like an empty threat. But I think lawsuits of this kind are coming.

Steve M. at 10:59 AM