Political stunts and an uphill battle: Breaking down Cruz and DeSantis' proposed Bud Light lawsuits
It's been a defining year for Bud Light, and its parent company Anheuser-Busch, as the brand misstepped its way into being boycotted by both conservatives and liberals.
After Bud Light partnered with trans activist and influencer Dylan Mulvaney on a short sequence of social media posts, several enraged conservative conservative public figures — including Kid Rock and Dan Crensaw — called for a boycott until the brand severed ties with Mulvaney and apologized.
However, amid increasing threats of violence towards the transgender community, Bud Light instead issued a tepid response.
"We never intended to be part of a discussion that divides people. We are in the business of bringing people together over a beer," Anheuser-Busch (AB InBEV) CEO Brendan Whitworth said in an April 14 statement titled "Our Responsibility to America."
This caused the Human Rights Campaign (HRC), which rates companies based on their commitment to LGBTQ safety and equality, to suspend Anheuser-Busch's Corporate Equality Index, effective immediately.
Then, NBC News reported in May that sales volumes of Bud Light for the week ending May 13 sank 28.4%, extending a downward trend from the 27.7% decline the week before. In the months since, sales have been slow to rally as conservatives continue to use their interactions with the brand as a way to campaign and grandstand, like in the case of Texas senator Ted Cruz and Florida governor Ron DeSantis.
Both politicians have called for investigations into Bud Light and Anheuser-Busch, which could lead to lawsuits. However, does either case actually have any merit? Let's break it down:
Why is Ted Cruz (and Marsha Blackburn) threatening litigation against Bud Light?
In May, Ted Cruz announced that he was calling for an investigation into Bud Light — or more specifically, he was calling for Whitworth, Anheuser-Busch's CEO and the chairman of the beer industry's self-regulatory body, the Beer Institute, to investigate whether his brand had somehow broken the law by partnering with Mulvaney.
Cruz's reasoning? As the Houston Chronicle reported, Cruz, who is the the top Republican on the Senate Commerce Committee, says Anheuser-Busch is marketing to minors because Mulvaney's audience "skews significantly younger than the legal drinking age."
Marsha Blackburn, the Republican senator from Tennessee, sent a letter to Whitworth in support of Cruz.
"We would urge you, in your capacity at Anheuser-Busch, to avoid a lengthy investigation by the Beer Institute by instead having Anheuser-Busch publicly sever its relationship with Dylan Mulvaney, publicly apologize to the American people for marketing alcoholic beverages to minors, and direct Dylan Mulvaney to remove any Anheuser-Busch content from [her] social media platforms," the letter, which purposely misgendered Mulvaney, said.
A month later, Cruz submitted a 13-page memo "detail[ing] how Bud Light's sponsorship of Dylan Mulvaney violated industry standards that prohibit marketing to underage individuals." A three-panel board at the Beer Institute's Code Compliance Review Board will now conduct an official review of Anheuser-Busch's decision to sponsor Mulvaney.
Why is Ron DeSantis threatening litigation against Bud Light?
In a Thursday interview with Fox News, DeSantis accused Anheuser-Busch of maintaining a "political agenda at the expense of your shareholders" because of its short-lived partnership with Mulvaney, and toyed with the idea of calling for an investigation of the company. "That's not just impacting very wealthy people. It impacts hardworking people who were police officers, firefighters and teachers in terms of the pension," DeSantis said.
He told the network that the investigation could lead to a derivative lawsuit filed on behalf of the shareholders of the Florida pension fund against AB InBev. "Because, at the end of the day, there's got to be penalties for when you put business aside to focus on your social agenda at the expense of hardworking people," DeSantis said.
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As CNBC reported, DeSantis then instructed Lamar Taylor, the interim executive director of the State Board of Administration, to immediately launch a review into "how AB InBev's conduct has impacted and continues to impact the value of SBA's AB InBev holdings."
Both Cruz and DeSantis face uphill legal battles
Cruz's argument, that Bud Light knowingly marketed to minors by partnering with a social media influencer with younger followers, doesn't seem to hold a lot of water. In an emailed statement to media, an Anheuser-Busch spokesperson said that the company adheres to Beer Institute rules that influencers "reasonably appear" to be over 21 and not appeal primarily to underaged people.
"All of Anheuser-Busch's marketing is directed to adults of legal drinking age, and the engagement of this social media influencer was in compliance with the Beer Institute's Advertising and Marketing Code," the statement said.
As Salon Food reported in May, several political writers, including Huffington Post's Ron Dicker, have pointed out that the nature of Cruz and Blackburn's request — as well the fact that Whitworth actually chairs the organization they're petitioning — makes it seem like a political stunt.
Legal experts also predict that DeSantis will face an "uphill battle"in his lawsuit against Bud Light.
As Newsweek reported on Monday, a spokesperson for Florida's State Board of Administration (SBA) confirmed to the publication that its "Global Equity Asset Class held 819,880 equity shares of AB InBev, with a market value of nearly $48 million on behalf of the Florida Retirement System Defined Benefit Pension Plan."
However, attorney Arash Sadat, partner at Mills Sadat Dowlat LLP, told Newsweek that it's not entirely clear what action, if any, DeSantis wants AB InBEV to take to correct the alleged "breach of duties" and that we won't know until the shareholders — not DeSantis alone — make a formal demand or file a lawsuit.
Sadad added that corporate executives are given a great deal of latitude under the law to make decisions they feel are in their company's best interests. Rainbow capitalism aside, the fact that Bud Light produced an advertisement that is in line with how other brands that have aligned themselves with the LGBTQ community works in their favor.
"This is called the 'business judgment rule' and it presents a fairly high bar for shareholders to overcome," Sadad said. "Even assuming that the recent dip in Bud Light sales was caused by either the Mulvaney marketing campaign or Bud Light's failure to fire those responsible for it, it's not at all clear that these decisions were so ill-conceived that they justify court intervention."
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