How the Boycott Divestment and Sanctions Movement (BDS) Exposes Universities to Title VI and Trustee Liability.

By: Joel H. Siegal, Attorney at Law, and Neal M. Sher, Attorney at Law

On March 13, 2013, the student council at U.C. San Diego passed a nonbinding resolution calling for boycotting firms with business ties to Israel. The resolution proposed by a Registered Student Organization (RSO) called Students for Justice in Palestine, (SJP) was similar to resolutions previously passed at U.C. Riverside and U.C. Irvine. The resolution names Boeing, General Dynamics, Hewlett Packard, Ingersoll Rand, Caterpillar and Raytheon among those companies that “profit from Israel’s occupation and violence against Palestinians ….” Eyes are now turning toward U.C. Berkeley to see if another BDS resolution is on the horizon there. A divestment measure was passed in 2010, but subsequently vetoed.

As the furor of BDS hits campuses throughout California and the United States, the fundamental question of whether or not these BDS campaigns could expose the University to liability needs to be addressed. University administrators, faced with shrinking budgets to implement fundamental educational programs, need to be mindful of the financial implications of these BDS campaigns.

  1. BDS potentially violates Title Six of the Civil Rights Act. Often times, the debate at Student Senate hearings on BDS resolutions, digress to one sided Israel bashing festivals. Title Six of the Civil Rights Act protects students from a hostile and intimidating environment on Campus. The University needs to be mindful of the vitriol expressed in the BDS campaign. As eloquently stated by Natan Sharansky there is a “three D” test for anti-Semitism. First, double standards singling out Israel for criticism while ignoring the more egregious behavior of major human rights abusers in the world; Second, demonization of  Israel and distorting the Jewish state’s action by means of false comparisons with Nazis or South African Apartheid; Third, delegitimization i.e. denying the fundamental right of the existence of a Jewish state. These are example of anti-Semitism, and when these arguments are expressed are parts of BDS resolution debate, hostile environments to Jewish students have been created. As Thomas Friedman wrote in the New York Times, “singling out Israel for opprobrium and international sanction- out of all proportion to any other party in the Middle East is anti-Semitic and not saying so is dishonest. University officials should recognize that violation of Title Six has significant consequences such as the possible loss of Federal Funds.
  2. Passage of a BDS resolution could expose university urustees to liability under ERISA.  Support of a BDS resolution may well expose the University and its trustees to Liability under the Employee Retirement Income and Securities Act (ERISA) Sec. 404 (a) (1) (A) (B). ERISA is the Federal law that governs many universities Pension and Trust funds. The law provides that fiduciaries, including trustees, must discharge their duties, “solely in the interest of the participants and beneficiaries for the exclusive purpose of providing benefits to the participants and their beneficiaries. The Department of Labor is in concurrence that investment decisions not based upon a portfolio’s ability to provide benefits for beneficiaries may be imprudent and violates of ERISA. It is hard to imagine that a beneficiary, who questioned a Funds decision to divest from a stock that was providing good return, yet did business with Israel, was improper. Such a decision would no doubt expose university trustees to fiduciary liability.

It is clear, that there are potentially huge legal liabilities for Universities’ who support and fail to effectively monitor BDS campaigns. This article has just scratched the surface of potential University liability for support of these resolutions.

Neal M. Sher is a New York Attorney and former Director of the Office of Special Investigations in the U.S. Department of Justice.

Joel H. Siegal is a San Francisco attorney who specializes in civil rights, and labor litigation

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