Ben & Jerry’s is suing its proprietor, the client merchandise large Unilever, in an uncommon case that seeks to cease Unilever from promoting the distribution rights of the ice cream model in Israel to a neighborhood licensee.
Last yr, Ben Cohen and Jerry Greenfield, the founders of the firm well-known for its stances on hot-button points, stated they might finish gross sales in Israeli-occupied territories. The licensee is predicted to proceed promoting Ben & Jerry’s in these areas.
The rift between Ben & Jerry’s and Unilever dates to Unilever’s acquisition of the ice cream model in 2000, the DealBook publication experiences. As a part of that deal, Unilever agreed to let Ben & Jerry’s impartial board, of which Unilever appoints solely two of the 11 seats, proceed to supervise the model and its picture.
The uncommon association gave the founders continued management regardless of the sale of their firm. Typically, shareholders vote in elections for the board. But this contract is between Unilever and Conopco, which is formally the solely shareholder of Ben & Jerry’s. Conopco is obliged to vote for the founders’ board picks and their successors, who’re additionally named by Ben & Jerry’s board.
Unilever is ready to decide on the model’s chief govt, which is one thing a board usually does, however even that individual is meant to defer to Ben & Jerry’s impartial board relating to sustaining “the social responsibility aspects of the company,” Ann Lipton, a professor in enterprise regulation at Tulane University Law School who has studied the acquisition, advised DealBook.
But Unilever seems to have a potential out, Ms. Lipton stated. The contract itself won’t be enforceable in court docket. Traditionally, a contract is between two events. In this case, the settlement may have been between Unilever and Ben & Jerry’s founders, nevertheless it’s not, she stated.
“That’s like having a contract with yourself,” Ms. Lipton advised DealBook. “If you’re the only shareholder of the company, the idea that the company can make a contract with you is sort of unheard-of. It’s very strange.”
She stated she hadn’t heard of an analogous case, including, “It’s a case study in business law class.”