Judge narrows Ben & Jerry's lawsuit accusing Unilever of silencing social activism

By Jonathan Stempel

NEW YORK, Aug 21 (Reuters) - A federal judge on Friday dismissed major portions of a Ben & Jerry's lawsuit accusing its former parent Unilever of trying to silence the ice cream maker's social activism, dismantle its board and stop funding its namesake foundation.

U.S. District Judge Kevin Castel in Manhattan dismissed seven claims and part of an eighth in a 10-count complaint by Vermont-based Ben & Jerry's, whose flavors include Cherry Garcia, Half Baked and Phish Food, and by various independent directors.

Castel also said Magnum, the Amsterdam-based company that has owned Ben & Jerry's since it was spun off from Unilever last year, will take Unilever's place as the primary defendant.

The dismissed claims relate primarily to how Ben and Jerry's operates, while the two claims that survived in full relate to missed payments by Unilever.

Unilever's 2000 purchase of Ben & Jerry's had preserved substantial and uncommon freedoms for the ice cream company, relative to most acquisitions.

These included an independent board, and the ability to continue pursuing a social mission and charitable work dating from its 1978 founding by Ben Cohen and Jerry Greenfield.

The relationship began unraveling in 2021, however, when Ben & Jerry's decided to stop selling ice cream in the Israeli-occupied West Bank.

Lawyers for Ben & Jerry's independent directors did not immediately respond to requests for comment. Unilever and its lawyers also did not immediately respond.

Magnum said that it welcomed Castel's decision, which it said significantly narrowed the case, and that the Ben & Jerry's brand is thriving.

CENSORSHIP, MISSED PAYMENTS ALLEGED

Ben & Jerry's accused Unilever of violating the 2000 merger agreement by censoring its speech, which has included protests against the war in Gaza, and ousting a chief executive who supported the company's social activism. The alleged censorship also included an effort to suppress planned criticism of U.S. President Donald Trump as he began his second White House term.

In addition, it accused Unilever of violating a 2022 settlement over the sale of Ben & Jerry's trademark rights in Israel, by failing to pay $2.5 million to Ben & Jerry's and $2 million to support Palestinian almond farmers.

Unilever denied censoring Ben & Jerry's and said the former chief executive voluntarily resigned.

Castel said the merger agreement's "plain meaning" did not afford Ben & Jerry's Class I directors and the Ben & Jerry's Foundation a right to sue on behalf of the company, including on the appointment and removal of directors.

The judge said the directors could challenge new board eligibility requirements. He also said directors could sue over the missed payments on their own behalf, not on Ben & Jerry's behalf.

Unilever and Magnum agreed that claims over the missed payments could proceed for now, court papers show.

The two companies are separately seeking the dismissal of a defamation lawsuit in San Francisco by Anuradha Mittal, who was ousted last December as chair of Ben & Jerry's independent board. She accused the companies of vilifying and discrediting her for supporting Palestinian rights.

Other Magnum brands include Breyers, Klondike and Wall's. Unilever brands include Dove, Hellmann's, Knorr, Lifebuoy and Vaseline.

(Reporting by Jonathan Stempel in New York; Editing by Edmund Klamann)