Senate Bill 2829: Marco Rubio’s Out to Mind Your Business
I never would have expected the word “woke” to be used in its adjective form in an actual bill put forth in the United States Senate, but here we are, in the real life idiocracy we call American government. Senate bill 2829, AKA the “Mind Your Own Business Act” (yes, really) put forth by Senator Marco Rubio, who apparently needs attention, is presented thusly:
A bill to amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission to require the contractual provision by large issuers of procedural privileges with respect to certain shareholder claims relating to board and management accountability for “woke” social policy actions as a condition of listing on a national securities exchange.
I have to first admit that I am not a securities lawyer, and I don’t know much of anything about the subject. However, I did attempt to read and understand the bill. As it has been described in the press, the bill is to give shareholders of large corporations the power to sue corporations’ directors and officers if they make policy decisions with which the shareholder disagrees. Cited as an example by proponents of the bill: Nike’s alliance with Colin Kaepernick, and the Gillette commercial from a few years ago that dared to suggest we should raise boys to be good men who don’t treat women badly or bully others.
A corporation’s Board of Directors already has a fiduciary duty to their shareholders to make responsible decisions in their interest, i.e., profitability. Shareholders can vote for or against members of the board, and for or against major changes to the corporation or its by-laws. They can bring suits against individual directors and officers for breaches of fiduciary duty, subject to by-laws and state and federal laws. A claim against an officer or director for breaching their fiduciary duty typically involves a claim that the corporate decisionmaker has done something that either elevated their own financial interests above those of the corporation and its shareholders, or has made an incredibly boneheaded decision while governing the company.
In such suits, corporate actors are given the benefit of the doubt that their actions are taken in good faith and in the pecuniary interest of shareholders, and a plaintiff must prove otherwise. This bill shifts the burden when the complained-of action is one deemed “woke”, making any such action presumptively contrary to the pecuniary interests of the shareholder. While one might think that perhaps a bill like this might backfire and have shareholders filing suit over corporate actions promoting conservative causes, the drafters were very specific about what ideologies are unacceptable. Not included are any actions that fall under the exercise of religious liberty (which no doubt is intended to cover LGBTQ matters and reproductive freedom issues), actions in reaction to or opposing restrictive voting laws, or in opposition to ” the national security of the United States, the Armed Forces, or veterans of the Armed Forces…” In other words, the bill doesn’t apply to shareholders who object to corporate actions which promote conservative causes.
A corporate defendant under the bill could not claim an action was in the corporation’s best interest on the basis of promoting diversity, employee morale, the public image of the company, or improved hiring and retention.
The bill specifically states that it should not be construed as limiting the exercise of religion “as defined in the Religious Freedom Restoration Act of 1993.” But it does not make any such provision for the violation of freedom of speech. The Supreme Court has held that corporations are “people” for most First Amendment purposes, including political speech; this certainly appears to be an attempt to have Congress make a law abridging the freedom of speech.
Take Nike and its use of Colin Kaepernick in advertising. It is true that advertising speech is subject to more restrictions – false and misleading advertisements don’t receive First Amendment protection. But this is not that; this is a corporation – an “association of citizens,” according to the Supreme Court in Citizens United – expressing itself through the advertising medium. And what about a corporation’s decision to move its headquarters out of a particular state to protest uber-restrictive abortion laws or voting laws it deems unfair to minorities, two scenarios that the Mind Your Own Business Act specifically targets, and releases a public statement explaining its intention? The proposed law aims to chill political speech. (Never mind that the Colin Kaepernick advertising campaign was immensely profitable for Nike. Kaepernick’s jersey became the best-selling football jersey of 2017 despite Kaepernick not actually playing professional football.)
The bill states its aim as protecting shareholders from the use of corporate resources to “to advance narrowly political or partisan agendas” or “to promote socialism, Marxism, critical race theory, or other un-American ideologies among their workforces or customers,” under the guise of protecting the investments made by shareholders, even though the purpose is transparently political, not financial. Otherwise, the bill would include provisions to deter the use of corporate resources to further any cause that might cause damage to the company’s value and thus to shareholders, regardless of the ideological slant.
If a corporation is making a decision with which one disagrees, one may sell that stock and buy a stake in a company holding values with which he or she more closely aligns. Unfortunately for those who agree with Marco Rubio here, Hobby Lobby and Chik-fil-A are not publicly traded, but I’m sure there are plenty of other companies that agree with their various anti-woke stances.
I predict this bill has roughly a snowman’s chance in Hades of going anywhere, but it would be nice if our Congress would put forth effort into getting important things done instead of grandstanding stunts like this. Yes, Marco Rubio, we see you. We are all very impressed with your big fancy bill. Your virtues have been sufficiently signaled.
Now please find something constructive to do.