The party that has traditionally embraced free markets and free people – that once proudly declared that the business of America is business – is increasingly finding itself on the other side of Corporate America when it comes to hot-button culture war debates.
Conservatives are watching in horror as firms like Uber and Lyft explicitly wade intoTexas’s abortion debate on behalf of pro-choice liberals and Google adopts critical race theory-adjacent anti-racism initiatives.
Once upon a time, Republicans took for granted that the c-suite, like the country club or most every mainline Protestant church in America, was reliably Republican. Donald Trump, in the ancient land of 2015, understood that wasn’t true anymore, and now Marco Rubio, the Florida senator, is picking up where the former president left off.
He just introduced the Mind Your Own Business Act, which looks to empower shareholders to hold woke corporations accountable.
Currently, it’s very difficult for shareholders to successfully sue the directors of a corporation. That’s because of the business judgement rule, a doctrine that leads courts to typically uphold decisions made by directors as long as those directors acted in good faith and with the honest belief that the action served the best interests of the company.
“I would say most directors wouldn’t even serve on corporations if they didn’t think they were protected by the business judgement rule. The number of cases in which directors have had to pay presently is…small,” Dennis McCuistion, Professor Emeritus at UT Dallas and a specialist on corporate governance, told me.
Rubio’s bill would put the burden of proof on businesses to prove that any political actions they take part in benefit shareholders and the company. If they could not prove that interest, then corporate officers could be held liable.
“What they’re saying in this [bill], is that the business judgement rule wouldn’t protect them if, in fact…the claimants could prove that the action that they took was not in the best [pecuniary] interests of the shareholders,” McCuistion explained.
In a statement provided to me, Rubio’s office explained that the bill would provide “shareholder plaintiffs with certain procedural advantages in state law fiduciary duty litigation under defined circumstances that indicate the apparent presence of political conflicts of interest.”
They named four circumstances in particular: when a company takes “material action” in “response to a state law when the subject of the law is unrelated to the company’s financial interest,” to boycott “an industry in which the company already does business primarily on a basis that is unrelated to the company’s financial interest,” to promote “critical race theory and other critical theories defined by President Trump’s 2020 Executive Order,” or for “which it uses public reasoning to justify the action that is primarily non-financial in nature.”
Conservative activists and business leaders I talked to praised Rubio for offering a legislative vehicle for taking on corporate wokeness. “Republicans talk about woke capital all the time and conservatives go to these conferences, and we talk about ‘what are the ways we can actually fight these guys?’” Jon Schweppe, a long-time conservative operative who today does policy work at the American Principles Project, told me. “It always ends up being cultural stuff…ultimately like this is the first example of a Senator, a Republican Senator, anyway, proposing a way to exert some form of state power against woke capital.”
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