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DeSantis eyes lawsuit over Bud Light’s deal with trans influencer. Experts are skeptical.

Sources agree company was acting in its best interests

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Florida Gov. Ron DeSantis (Screen capture/CNN)

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.

ā€œIt 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.ā€

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, ā€œWe must prudently manage the funds of Floridaā€™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 ā€” intimidation by elected leaders, coordinated online attacks, incendiary coverage in partisan media ā€” 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.

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After Biden signs TikTok ban its CEO vows federal court battle

ā€œRest assured, we arenā€™t going anywhere,ā€ CEO said

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TikTok mobile phone app. (Screenshot/YouTube)

President Joe Biden signed an appropriations bill into law on Wednesday that provides multi-billion dollar funding and military aid for Ukraine, Israel, and Taiwan after months of delay and Congressional infighting.

A separate bill Biden signed within the aid package contained a bipartisan provision that will ban the popular social media app TikTok from the United States if its Chinese parent company ByteDance does not sell off the American subsidiary.

Reacting, TikTok CEO Shou Zi Chew said Wednesday that the Culver City, Calif.-based company would go to court to try to remain online in the U.S.

In a video posted on the company’s social media accounts, Chew denounced the potential ban: ā€œMake no mistake, this is a ban, a ban of TikTok and a ban on you and your voice,ā€ Chew said. ā€œRest assured, we arenā€™t going anywhere. We are confident and we will keep fighting for your rights in the courts. The facts and the constitution are on our side, and we expect to prevail,ā€ he added.

White House Press Secretary Karine Jean-Pierre adamantly denied during a press briefing on Wednesday that the bill constitutes a ban, reiterating the administration’s hope that TikTok will be purchased by a third-party buyer and referencing media reports about the many firms that are interested.

Chew has repeatedly testified in both the House and Senate regarding ByteDance’s ability to mine personal data of its 170 million plus American subscribers, maintaining that user data is secure and not shared with either ByteDance nor agencies of the Chinese government. The testimony failed to assuage lawmakers’ doubts.

In an email, the former chair of the House Intelligence Committee, U.S. Rep. Adam Schiff (D-Calif.), who doesn’t support a blanket ban of the app, told the Washington Blade:

ā€œAs the former chairman of the House Intelligence Committee, I have long worked to safeguard Americansā€™ freedoms and security both at home and abroad. The Chinese Communist Partyā€™s ability to exploit private user data and to manipulate public opinion through TikTok present serious national security concerns. For that reason, I believe that divestiture presents the best option to preserve access to the platform, while ameliorating these risks. I do not support a ban on TikTok while there are other less restrictive means available, and this legislation will give the administration the leverage and authority to require divestiture.ā€

A spokesperson for U.S. Sen. Alex Padilla (D-Calif.) told the Blade: ā€œSenator Padilla believes we can support speech and creativity while also protecting data privacy and security. TikTokā€™s relationship to the Chinese Communist Party poses significant data privacy concerns. He will continue working with the Biden-Harris administration and his colleagues in Congress to safeguard Americansā€™ data privacy and foster continued innovation.ā€

The law, which givesĀ ByteDance 270 days to divest TikTokā€™s U.S. assets, expires with a January 19, 2025 deadline for a sale. The date is one day before Biden’s term is set to expire, although he could extend the deadline by three months if he determines ByteDance is making progress or the transaction faces uncertainty in a federal court.

Former President Donald Trump’s executive order in 2020, which sought to ban TikTok and Chinese-owned WeChat, a unit of Beijing-based Tencent, in the U.S., was blocked by federal courts.

TikTok has previously fought efforts to ban its widely popular app by the state of Montana last year, in a case that saw a federal judge in Helena block that state ban, citing free-speech grounds.

The South China Morning Post reported this week that the four-year battle over TikTok is a significant front in a war over the internet and technology between Washington and Beijing. Last week, Apple said China had ordered it to remove Meta Platformsā€™s WhatsApp and Threads from its App Store in China over Chinese national security concerns.

A spokesperson for the ACLU told the Blade in a statement that “banning or requiring divestiture of TikTok would set an alarming global precedent for excessive government control over social media platforms.”

LGBTQ TikToker usersĀ are alarmed, fearing that a ban will represent the disruption of networks of support and activism. However, queer social media influencers who operate on multiple platforms expressed some doubts as to long term impact.

Los Angeles Blade contributor Chris Stanley told the Blade:

“It might affect us slightly, because TikTok is so easy to go viral on. Which obviously means more brand deals, etc. However they also suppress and shadow ban LGBTQ creators frequently. But we will definitely be focusing our energy more on other platforms with this uncertainty going forward. Lucky for us, we arenā€™t one trick ponies and have multiple other platforms built.”

Brooklyn, N.Y.,-based gay social media creator and influencer Artem Bezrukavenko told the Blade:

“For smart creators it wonā€™t because they have multiple platforms. For people who put all their livelihood yes. Like people who do livestreams,” he said adding: “Personally Iā€™m happy it gets banned or American company will own it so they will be less homophobic to us.”

TikTokā€™s LGBTQ following has generally positive experiences although there have been widely reported instances of users, notably transgender users, seemingly targeted by the platformā€™s algorithms and having their accounts banned or repeatedly suspended.

Of greater concern is the staggering rise in anti-LGBTQ violenceĀ and threats on the platform prompting LGBTQ advocacy group GLAAD, in its annual Social Media Safety Index, to give TikTok a failing score on LGBTQ safety.

Additional reporting by Christopher Kane

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Smithsonian staff concerned about future of LGBTQ programming amid GOP scrutiny

Secretary Lonnie Bunch says ‘LGBTQ+ content is welcome’

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Lonnie G. Bunch III, secretary of the Smithsonian Institution, appears before a Dec. 2023 hearing of the U.S. Committee on House Administration (Screen capture: Forbes/YouTube)

Staff at the Smithsonian Institution are concerned about the future of LGBTQ programming as several events featuring a drag performer were cancelled or postponed following scrutiny by House Republicans, according to emails reviewed by the Washington Post.

In December, Secretary Lonnie G. Bunch III appeared before a hearing led by GOP members of the Committee on House Administration, who flagged concerns about the Smithsonian’s involvement in “the Left’s indoctrination of our children.”

Under questioning from U.S. Rep. Stephanie Bice (R-Okla.), Bunch said he was “surprised” to learn the Smithsonian had hosted six drag events over the past three years, telling the lawmakers “It’s not appropriateĀ to expose children” to these performances.

Collaborations with drag artist Pattie Gonia in December, January, and March were subsequently postponed or cancelled, the Post reported on Saturday, adding that a Smithsonian spokesperson blamed ā€œbudgetary constraints and other resource issuesā€ and the museums are still developing programming for Pride month in June.

ā€œI, along with all senior leaders, take seriously the concerns expressed by staff and will continue to do so,ā€ Bunch said in a statement to the paper. ā€œAs we have reiterated, LGBTQ+ content is welcome at the Smithsonian.ā€

The secretary sent an email on Friday expressing plans to meet with leaders of the Smithsonian Pride Alliance, one of the two groups that detailed their concerns to him following December’s hearing.

Bunch told the Pride Alliance in January that with his response to Bice’s question, his intention was to “immediately stress that the Smithsonian does not expose children to inappropriate content.”

“A hearing setting does not give you ample time to expand,ā€ he said, adding that with more time he would have spoken “more broadly about the merits and goals of our programming and content development and how we equip parents to make choices about what content their children experience.ā€

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Survey finds support for Biden among LGBTQ adults persists despite misgivings

Data for Progress previewed the results exclusively with the Blade

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Former President Donald Trump and President Joe Biden (Washington Blade photo by Michael Key)

A new survey by Data for Progress found LGBTQ adults overwhelmingly favor President Joe Biden and Democrats over his 2024 rival former President Donald Trump and Republicans, but responses to other questions may signal potential headwinds for Biden’s reelection campaign.

The organization shared the findings of its poll, which included 873 respondents from across the country including an oversample of transgender adults, exclusively with the Washington Blade on Thursday.

Despite the clear margin of support for the president, with only 22 percent of respondents reporting that they have a very favorable or somewhat favorable opinion of Trump, answers were more mixed when it came to assessments of Biden’s performance over the past four years and his party’s record of protecting queer and trans Americans.

Forty-five percent of respondents said the Biden-Harris administration has performed better than they expected, while 47 percent said the administration’s record has been worse than they anticipated. A greater margin of trans adults in the survey ā€” 52 vs. 37 percent ā€” said their expectations were not met.

Seventy precent of all LGBTQ respondents and 81 percent of those who identify as trans said the Democratic Party should be doing more for queer and trans folks, while just 24 percent of all survey participants and 17 percent of trans participants agreed the party is already doing enough.

With respect to the issues respondents care about the most when deciding between the candidates on their ballots, LGBTQ issues were second only to the economy, eclipsing other considerations like abortion and threats to democracy.

These answers may reflect heightened fear and anxiety among LGBTQ adults as a consequence of the dramatic uptick over the past few years in rhetorical, legislative, and violent bias-motivated attacks against the community, especially targeting queer and trans folks.

The survey found that while LGBTQ adults are highly motivated to vote in November, there are signs of ennui. For example, enthusiasm was substantially lower among those aged 18 to 24 and 25 to 39 compared with adults 40 and older. And a plurality of younger LGBTQ respondents said they believe that neither of the country’s two major political parties care about them.

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