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Forsyth: Can states boycott contractors who boycott Israeli products?

By: Scott Forsyth//January 2, 2018

Forsyth: Can states boycott contractors who boycott Israeli products?

By: Scott Forsyth//January 2, 2018

FORSYTHThe founding of Israel was and remains contentious. The Arab states responded, in part, by instituting an economic boycott of all things Israeli. The boycott extended to non-Israeli firms that did business with the government of Israel or Israeli firms.

In the late 1970s Congress became concerned that American firms were being pressured to comply with the Arab boycott. Therefore, it directed the president to issue regulations prohibiting “any United States person” from “comply(ing) with, further(ing), or support(ing) any boycott fostered or imposed by a foreign country against a country which is friendly to the United States.” 50 U.S.C. § 4607.

Note the law does not directly reference Israel, but the Arab boycott was its impetus and was the subject of an early regulation. Also, a foreign country must originate or promote the boycott. The courts have upheld the constitutionality of the law. See, e.g., Briggs & Stratton Corp. v. Baldridge, 728 F.2d 915 (7th Cir. 1984).

The boycott movement has evolved. Individuals and nonprofits have taken the lead in the United States, part of BDS, short for Boycott, Divestment, Sanctions. Usually participants take exception to Israel’s treatment of the Palestinians, including the country’s building of settlements in the occupied territories. The participants express their disagreement by a variety of means, including refusing to purchase goods and services offered by Israeli companies.

There is talk in Congress of extending the prohibition on supporting foreign country boycotts to BDS activity, but it has not taken any action. Not so at the state level. At least 16 states have passed laws requiring third parties not to boycott Israel if they want to do business with the states.

Kansas’ law, HB 2409, is typical. It prohibits the state from “enter(ing) into a contract with an individual or company to acquire or dispose of services, supplies, … unless such individual or company submits a written certification that such individual or company is not currently engaged in a boycott of Israel.”

A boycott means “refusing to deal … or performing other actions that are intended to limit commercial relations with persons or entities doing business in Israel or in territories controlled by Israel” “in compliance with … calls for a boycott of Israel.”

Enter Esther Koontz, a veteran math teacher at a Wichita high school. She doubles as a “teacher trainer,” hired by Kansas as an independent contractor to instruct other teachers about the state’s math and science program.

Koontz happens to be a Mennonite. For nine months her church studied the treatment of the Palestinians by the Israeli government, hearing many viewpoints. At the end of the study the church called on its members “to take active and specific steps to redress” the “injustice and violence that both (Palestinians and Jews) have experienced.” Koontz accepted the call and decided to boycott consumer goods and services offered by Israeli companies and by international companies operating in the occupied territories.

After Kansas adopted HB 2409 last July, it sent to Koontz the certification called for by the law. She refused to sign it as a matter of conscience, whereupon the state informed her she could no longer serve as a trainer.

Koontz turned to the ACLU and it brought a suit on her behalf. It is arguing the state is financially penalizing her for engaging in disfavored speech, in violation of the First Amendment. Koontz v. Watson, No. 17-cv-4099 (D. Kan. Oct 11, 2017)

Not at issue, so far, is the right of Koontz to engage in a peaceful consumer boycott for political purposes. Thirty-five years ago the Supreme Court upheld the right, insulating the NAACP from liability for losses sustained by businesses in Port Gibson, Mississippi. They were the target of a 1966 boycott to protest racial segregation. NAACP v. Clairborne Hardware Co., 458 U.S. 886 (1982).

But can Kansas choose with whom it does business on the basis of a contractor’s support of a political boycott? The ACLU answers no, unless the nature of the goods and services provided “requires political allegiance.” And Kansas “bears the burden of providing ‘whether political association (is) an appropriate requirement for the effective performance of the (contract) involved.’” This is a burden the state cannot meet.

Generally HB 2409 does not attempt to distinguish between contractors whose boycott of Israel may impact the operations of government from those who do not. It sweeps way too broadly, requiring all contractors to certify, even those not participating in any boycott activity.

Worse, HB 2409 chills speech before it happens. The law directly discourages contractors from participating in a peaceful political boycott. It also indirectly suppresses a wide range of related expression, such as speech about the boycott, association with boycott participants, demonstrations in support, and petitions to public officials. Contractors will engage in self-censorship to avoid any hint of impropriety.

Besides being overinclusive, HB 2409 is underinclusive. It does not apply to any boycott but that of Israel, even if the other boycotts may interfere with the acquisition or disposal of services and supplies. It does not apply to “reverse boycotts,” which target individuals and entities that boycott Israel. The political purpose of the boycott drives the penalty. This is quintessential viewpoint discrimination.

Some have accused the activities of persons like Koontz as a “thinly-veiled form of anti-Semitism.” That is a stretch. But even if Koontz has a base motive, she does not lose the protections of the First Amendment for her peaceful boycott activities.

What about New York? It did not follow the path of Kansas. Instead, in 2016 Governor Cuomo issued an executive order directing all agencies under his control “to divest their money and assets from any investment in any” company that participates in the BDS movement.

Koontz v. Watson is a test case, sure to be appealed. Whether its resolution impacts Cuomo’s more targeted approach on investments will depend on what the courts say.

Scott Forsyth is a partner in Forsyth & Forsyth and serves as legal counsel to the local chapter of the NYCLU but the views expressed herein are his own. He may be contacted at 585-262-3400 or [email protected].

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