Tag Archives: divestment

Facing divestment, ALEC threatens to sue critics who say it denies climate change

This post originally appeared on the Legislation Law Prof Blog

Way back In the 1980s, researchers at the American Legislative Exchange Council (ALEC) recognized divestment as a threat to business as usual (see yesterday’s post). At the time, the issue was apartheid, and the target for divestment was South Africa. In a 1983 legislative update, ALEC argued that “although South Africa is the initial target, it is not likely to be the last… activists can be expected to broaden their divestment strategy.”

Three decades later, the target is ALEC itself. Activists are using divestment to starve ALEC of revenue, by scaring off its corporate members. A few years ago, in the wake of the Trayvon Martin shooting and the revelation that ALEC had supported Stand Your Ground laws, corporations started canceling their ALEC memberships. Activists realized that by exposing ALEC’s extreme positions, they could pressure corporations to cut ties with ALEC.

For the past year, the issue has been whether ALEC denies the science of climate change. ALEC’s critics assert it does. ALEC denies the claim. Last month, ALEC sought to take the offensive, by sending cease-and-desist letters to its critics, saying that if they didn’t stop what it claims is defamation, it would sue.

How did things reach this point?

To understand, we need to roll the tape back to last September. Google Chairman Eric Schmidt, in an appearance on NPR’s Diane Rehm show, was asked about ALEC:

REHM: And how did you get involved with them in the first place? And were you then disappointed in what you saw?

SCHMIDT: Well, the company has a very strong view that we should make decisions in politics based on facts. What a shock. And the facts of climate change are not in question anymore. Everyone understands climate change is occurring. And the people who oppose it are really hurting our children and our grandchildren and making the world a much worse place. And so we should not be aligned with such people. They’re just literally lying.

This statement seemed to blindside ALEC. Within days, it sent top Google executives a letter, asserting that “ALEC recognizes that climate change is an important issue.” And by the following week, it had posted a new statement on climate change on its website. The statement seeks to make clear that ALEC believes climate change is a problem, but also makes clear that it doesn’t think much can be done about it without harming the economy.

The statement didn’t stop the exodus. Within days, Facebook, Yahoo, and Yelp followed Google’s lead, and eBay followed suit in December. With Microsoft having jumped ship in July, by the end of 2014 ALEC was left without nearly all of its corporate sponsors from the technology sector.

Climate activists celebrated the success of their campaign to pressure tech firms. Brant Olsen of Forecast the Facts declared that “the departure of these firms from ALEC shows that denying the facts on climate change really doesn’t have a place in the modern business world.” And another Forecast the Facts campaigner announced their next targets: “we’re looking to AT&T, Verizon, FedEx and UPS to follow suit and distance themselves from Alec’s extreme climate denial agenda. If they choose to stay with ALEC, we’ll be taking the issue to their customers, shareholders and employees.”

Meanwhile, energy firms have also been canceling their ALEC memberships: first ConocoPhillips, then Occidental Petroleum (Oxy), and most recently BP. The companies would not say why, but Oxy may have responded to pressure by activist shareholders. A proxy statement submitted at its 2014 annual shareholder meeting noted ALEC’s opposition to climate policies and suggested the tie to ALEC could pose a reputational and business risk to Oxy.

ALEC’s filings with the IRS from 2010 through 2013 suggest that the departure of corporate members may be cutting into the organization’s finances. (Here are the filings: 2010, 2011, 2012, 2013; 2009 numbers appear on the 2010 form.) Contributions, total revenue, and net assets all peaked in 2011, and fell off markedly in 2012 and 2013. It will be interesting to see whether ALEC was able to turn this around in 2014.

image from http://s3.amazonaws.com/hires.aviary.com/k/mr6i2hifk4wxt1dp/15041020/2df4c84e-5277-40e0-a487-76bb630f2459.png

ALEC finances, 2009-2013

Last month, with corporate members continuing to flee, ALEC took the next step in its attempt to stanch the bleeding. In letters sent in early March to the League of Conservation Voters (LCV), Common Cause, and CREDO (available here), ALEC’s attorneys demanded that those organizations stop saying that ALEC denies climate change, and cease publishing allegedly false and misleading information.

ALEC’s move seems to have prompted Common Cause, CREDO, and a dozen allies to simply double down on their divestment campaign. On March 18, they registered alecclimatechangedenial.org, which now lays out the case against ALEC in one easy-to-digest website.

By late March, Common Cause and LCV had replied to ALEC’s demands (letters here; CREDO does not seem to have responded). Each organization declined to take down the webpages or retract the statements that ALEC asserted contained false information. LCV’s attorneys added that the ALEC letter “could be viewed as attempting to silence LCV under the threat of litigation.” They noted, with a touch of snark, that LCV was encouraged by ALEC’s support of model anti-SLAPP legislation, which aims to – in ALEC’s words – “encourage and safeguard public participation in civic society” and protect against abusive “lawsuits against those who express their views on matters of public concern.” As an example, LCV cited the anti-SLAPP law in the District of Columbia. Where, it so happens, ALEC is based.

This exchange of letters went public late last week, and has generated a wave of media attention. As the National Journal has observed, the letters tee things up for ALEC to bring a defamation lawsuit against its critics – though legal experts believe it would be very difficult for ALEC to prevail.

With ALEC’s critics refusing to back down, its corporate members running for the doors – T-Mobile left earlier this week – and its finances apparently in decline, it is unclear what better option it has left. If it backs down, it could be seen as conceding that its critics’ statements are justified. But if it sues, it would invite even more coverage of its controversial positions, and, even worse, potentially allow its opponents to use the discovery process to rifle through its internal files. And if ALEC were to let that happen, who knows what its critics might find?

#TBT: When ALEC First Recognized the Threat Posed by Divestment

This post originally appeared on the Legislation Law Prof Blog

Amid the recent RFRA controversy in Indiana, some journalists got to asking whether the American Legislative Exchange Council (ALEC) might’ve been behind the spread of “religious freedom” bills around the country. After all, over the years ALEC has promoted model bills on a wide range of topics.

But when the Christian Science Monitor looked into it, ALEC disavowed the RFRA bill entirely. As Bill Meierling, an ALEC spokesman, put it: “Limited government, free market and Federalism – if it doesn’t have to do with those three things we don’t do it.”

“Limited Government, Free Markets, Federalism” is ALEC’s slogan, but it’s a relatively recent proposition that the slogan actually defines the scope of its activities. ALEC has until just a few years ago promoted model bills whose connections to its slogan were tenuous, at best. Most notably, after the 2012 shooting of Trayvon Martin, the organization drew attention – and controversy – over having promoted a model “stand your ground” law. So much controversy, in fact, that major corporate donors began fleeing.

Which makes one wonder: has ALEC’s distance from RFRA been due to principle, or fear of further divestment? After all, a free market could be interpreted as one where people are free to refrain from providing services that conflict with their religious beliefs. Or, for that matter, as one where people have a right to be served without regard to their sexual orientation, skin color, or religious beliefs.

It seems more likely that, in the wake of the stand your ground incident, ALEC’s leadership has become hyper-aware of the threat of divestment – in two respects. First, the threat divestment poses for states that enact discriminatory laws, and are then targeted by campaigns like #BoycottIndiana. But also for ALEC itself, should controversial laws prompt its corporate sponsors to pull the plug on contributions.

Which brings us to Throwback Thursday. ALEC actually saw this coming – a long time ago.

Back in the early 1980s, ALEC was concerned about South Africa. Its concern was not so much the apartheid regime that was perpetuating institutionalized racial domination and exploitation, but rather some activists’ efforts to put an end to that regime. As People for the American Way has described, ALEC mobilized throughout the 1980s to oppose the campaign to divest from South Africa. As it noted in a 1983 policy paper,

The underlying problem is the strategy itself – targeting countries for economic sanctions because of actual or alleged human rights violations. Although South Africa is the initial target, it is not likely to be the last… If successful on the South African issue, these activists can be expected to broaden their disinvestment strategy.

In light of recent events, the analysis was prescient. After the Trayvon Martin shooting, there were calls to #BoycottFlorida. When discriminatory RFRA bills were passed in Arizona and enacted in Indiana, there were calls to boycott those states as well. And in the latter cases, those calls for divestment worked. They stopped the RFRA bill in Arizona, and led to it being amended in Indiana.

What’s more, as ALEC foresaw, the divestment strategy has broadened. It no longer sets its sights only on governments, but also on corporations and their allies. And, having identified ALEC as a key corporate ally, divestment activists have even marched right up to its own doorstep.

More on that – and ALEC’s response to it – tomorrow.

Has Big Business (and Big Sport) Put the Kibosh on Discriminatory RFRA Laws?

This post originally appeared on the Legislation Law Prof Blog

Much has been written about the recent RFRA uproar in Indiana, but what lessons might we take from it? Here’s one: Governor Mike Pence is not a very good student of history. Here’s another: Big Business and Big Sport may have put the kibosh — definitively — on the spread of discriminatory state RFRA laws.

First the history. In February of 2014, Arizona’s state legislature passed SB 1062, a bill intended to amend and extend existing state law, which prevented any law from substantially burdening a person’s exercise of religion. SB 1062 would have expanded the definition of “person” to include corporations and associations, and would have allowed religious freedom to be used as a claim or defense in lawsuits, whether or not the government was a party.

Opposition to the bill was immediate and overwhelming. Social media lit up, and #BoycottAZ began trending. Civil rights organizations spoke out. But something new also happened. Big businesses spoke out as well. Opponents included Apple, American and Delta airlines, Marriott Hotels, Intel, PetSmart, and Yelp. And Big Business included Big Sport. Major League Baseball issued a statement. The Arizona Cardinals and the National Football League spoke out, suggesting that if the bill became law, the 2015 Super Bowl might be moved from Arizona to another location. Governor Jan Brewer bowed to the pressure, and vetoed the bill.

Thirteen months later, history more or less repeated itself – except with a different order of events.

On March 24, the Indiana state legislature passed SB 101. As in Arizona, the law extended religious freedom protection to businesses, and permitted it to be used as a claim or a defense in private lawsuits. Pence could have taken a week to sign or veto the bill. But instead of waiting to see if opposition developed, Pence signed the bill on March 26.

The same day, opposition mobilized. #BoycottIndiana spiked. From just 56 tweets on March 24 and 2,783 on the 25^th, it jumped to nearly 60,000 tweets per day for the next three days. Civil rights organizations spoke out, and the largest newspaper in Indiana demanded on its front page that Pence “FIX THIS NOW.”

And, as in Arizona, Big Business and Big Sport spoke out. Salesforce said it would not send employees to Indiana. Angie’s List canceled a multimillion dollar expansion. Apple CEO Tim Cook wrote an op-ed describing the spread of state RFRA laws as “very dangerous.” And the head of the NCAA, which was slated to host the Final Four in Indianapolis, declared that the situation “absolutely, positively needs to get fixed.” After a weekend spent dragging his feet, Pence hopped to it, and last week ordered the legislature to pass SB 50, a bill barring discrimination, which he signed on Thursday.

For a governor whose official bio claims credit for helping Indiana “earn a global reputation as a great place to do business,” and touts his own small business experience, this episode was an enormous misstep. Perhaps Spence was taken in by the meme of the religious bakers and florists, and led to believe that there was actually a large and well-organized community of religious small business owners who would have his back. Or perhaps he simply failed to take any lessons from what had happened in Arizona. In any event, he crossed the desires of Big Business, and paid the price.

A couple states to the southwest, Arkansas governor Asa Hutchinson, faced with a similar situation, understood what he needed to do. With the Wal-Mart CEO telling him the RFRA bill as passed by the legislature “threatens to undermine the spirit of inclusion,” Hutchison sent the bill back and ordered up a version that parallels the federal law and prohibits discrimination.

According to NCSL, 18 bills related to religious freedom are still pending in ten states this year. Some, as in Oklahoma, seek to amend existing RFRA laws; others, as in North Carolina, seek to add RFRA or something similar to the state statutes. In several states, proposed bills have already failed.

In the wake of the experiences in Arizona, Indiana, and Arkansas, it is hard to imagine any of these states enacting a RFRA law that allows discrimination. At least in this case, the dominance of Big Business over the legislative process might be something for progressives to celebrate.