DeSantis eyes lawsuit over Bud Light’s deal with trans influencer

Legal experts skeptical; move labeled political stunt

By CHRISTOPHER KANE | ckane@washblade.com

As sales continue to slump after months of conservative backlash against Bud Light’s social media spot with trans influencer Dylan Mulvaney, Florida Gov. Ron DeSantis (R) announced he will explore a potential lawsuit against the beer brand’s parent company, Anheuser-Busch InBev.

“It appears to me that AB InBev may have breached legal duties owed to its shareholders,” DeSantis said in a letter shared on Twitter Friday outlining possible grounds for legal action on behalf of the shareholders of Florida’s pension funds.

Columbia University Law School Professor John Coffee, however, told the Washington Blade a legal doctrine called the business judgment rule “fully protects the board of Anheuser-Busch InBev from any liability for breach of fiduciary duty that might be asserted by Florida’s pension funds in a derivative suit.”

Caselaw directs courts to uphold decisions by company directors provided they are made in good faith, with the care expected of a reasonably prudent person, and with the reasonable belief that they were acting in the corporation’s best interests.

Multinational drink conglomerate AB InBev suffered financially as a result of Bud Light’s promotion with Mulvaney, with sales for the brand down 25 percent from last year according to market research data reported by CNBC.

“No doubt, Anheuser-Busch lost money because of the populist reaction to the use of a transgender ‘influencer,’ but that is not the standard for liability,” said Coffee, who is recognized as one of the country’s leading experts in securities law, corporate governance, white collar crime, complex litigation, and class actions.

Directors “were seeking to promote their product with a new audience, and it backfired, but that is not a breach of duty,” he said, adding, “Management has the legal right to innovate and try new tactics.”

Andrew Isen, founder and president of WinMark Concepts, agreed, telling the Blade, “Bud Light is an entry beer because of the price point,” so it made sense for the beer maker to target the younger demographics who comprise the influencer’s sizable online following.

“No one foresaw this backlash,” he said.

“They’re making business decisions, they’re making marketing decisions, to grow their business, and that’s what their responsibilities to their shareholders are,” said Isen, whose clients are mostly large publicly traded corporations.

Additionally, he said, partnering with an LGBTQ public figure like Mulvaney makes sense from a market research perspective.

For instance, Isen pointed to data from management consulting firm McKinsey & Co., which found that “for five years, our research has shown a positive, statistically significant correlation between company financial outperformance and diversity, on the dimensions of both gender and ethnicity.”

Coffee, who has repeatedly been listed among The 100 Most Influential Lawyers in America and topped rankings of the most-cited scholars in corporate and business law, told the Blade he is not aware of any previous cases in which a firm’s marketing or advertising decision provided grounds for shareholder litigation for breach of fiduciary duty in a derivative suit.

“I do not know if litigation will be brought,” he said, adding, “this sounds more like a political stunt.”

If DeSantis’s probe leads to an actual complaint on behalf of shareholders, Coffee said, “I would not expect it to survive a motion to dismiss in Delaware,” if AB InBev is headquartered in the state, where most commercial disputes are adjudicated.

“But the suit might be brought [improperly] in Florida,” Coffee said, “and anything might happen there.”

Regardless, Coffee said, “Gov. DeSantis will make no friends in the business community with these over broad attacks.”

DeSantis, addressing shareholders of his state’s pension funds, wrote in his letter on Friday that, “We must prudently manage the funds of Florida’s hardworking law enforcement officers, teachers, firefighters, and first responders in a manner that focuses on growing returns, not subsidizing an ideological agenda through woke virtue signaling.”

AB InBev is just the latest target of the governor’s crusade against “wokeism” in corporate America, a battle that his party is increasingly waging against companies’ environmental and social governance policies, their diversity, equity, and inclusion initiatives, and their criticism of conservative policies or policymakers.

Firms like Blackstone had come to understand concepts like responsible environmental stewardship and diversity in corporate boards of directors as intrinsic values that are good for business and “integral to their shareholders,” Isen said, referring to the investment management juggernaut that boasts more than $991 billion in assets under management.

However, as these moves come under fire from various factions on the right — intimidation by elected leaders, coordinated online attacks, incendiary coverage in partisan media — the business community is taking notice. Isen pointed to “the amount of companies that are getting rid of their diversity officers,” as reported last week in The Wall Street Journal.

This “noise,” Isen said, is “scaring companies to death.”

Other state officials have recently weaponized the power of their governments against companies over their support for the LGBTQ community. On July 5, seven Republican state attorneys general issued a letter to Target Corp. notifying the retailer that certain merchandise in its seasonal Pride collection may violate their obscenity statutes.

The popularity of DeSantis’s attacks on “woke” corporations will soon be tested as the governor heads into Republican primary races in hopes of securing his party’s nomination for the 2024 presidential election. DeSantis’s office did not respond to written questions or provide comment for this story.