Ben & Jerry’s is suing its owner, consumer goods giant Unilever, in an unusual case aimed at preventing Unilever from selling the ice cream brand’s distribution rights in Israel to a local licensee.
Last year, Ben Cohen and Jerry Greenfield, founders of a company known for its stance on sensitive issues, said they would end sales in the Israeli-occupied territories. Licensee expects to continue selling Ben & Jerry’s in these regions.
The rift between Ben & Jerry’s and Unilever dates back to Unilever’s acquisition of the ice cream brand in 2000, reports the DealBook newsletter. As part of this agreement, Unilever agreed to allow the independent board of Ben & Jerry’s, on which Unilever has only two of the 11 seats, to continue to oversee the brand and its image.
The unusual constellation enabled the founders to retain control of their company despite the sale. Normally, the shareholders vote in the elections for the board of directors. But the deal is between Unilever and Conopco, which is officially the sole shareholder of Ben & Jerry’s. Konopco is required to elect the founding board and vote for his successors, who are also nominated by the Ben & Jerry’s board.
Unilever can elect the brand’s chief executive, which a board normally does, but even that person needs to be promoted to Ben & Jerry’s independent board when “the corporate social responsibility aspects of the company” “When it comes to Ann Lipton. A business law professor at Tulane University Law School who was investigating the acquisition, DealBook said.
But it looks like Unilever has potential, Ms Lipton said. The contract itself cannot be enforced in court. Traditionally, a contract is made between two parties. In that case, the agreement between the founders of Unilever and Ben & Jerry’s could have happened, but it didn’t, she said.
“It’s like having a contract with you,” Ms Lipton told DealBook. “When you are the sole shareholder of the company, the notion that the company can deal with you is unknown. It’s very strange.”
She said she’s never heard of a similar case, adding, “It’s a case study in business law class.”