Eighth Circuit Upholds Arkansas Anti-BDS Law

The U.S. Court of Appeals for the Eighth Circuit, sitting en banc, ruled on June 22 that an Arkansas law requiring state contractors to pledge that they won’t boycott Israel does not violate the First Amendment. The central issue was whether the statute covered only unexpressive commercial conduct, or whether it also prohibited expressive conduct that is protected by the First Amendment. Writing for the majority in Arkansas Times LP v. Waldrip, et al, Judge Jonathan Kobes held that the act’s definition of “boycotting Israel” relates solely to commercial activities.

This ruling reversed a 2021 decision in which a divided Eighth Circuit panel held that the law infringed on constitutionally protected expressive activity because it deterred vendors from supporting or promoting a boycott of Israel. Although a majority of states have adopted similar legislation, this remains the only case where an appellate court has considered the constitutionality of an “anti-BDS” law. Following the full Eighth Circuit’s decision, the American Civil Liberties Union—which represents the Arkansas Times—pledged to appeal to the Supreme Court.

The case was brought by the Arkansas Times, a monthly alternative newspaper that contracts with the University of Arkansas Pulaski Technical College. The Times filed suit to prevent Pulaski Tech from requiring the paper to sign a pledge agreeing not to boycott Israel in order to renew an advertising contract. The newspaper takes no position on boycotts of Israel but argued that the statute violated the First Amendment by placing an unconstitutional restriction on the award of government contracts and by compelling speech. The state argued that the Arkansas act barring public entities from contracting with companies that boycott Israel prohibited only commercial activities that are not protected by the First Amendment.

Over 30 states have enacted similar restrictions on contracting with entities that boycott Israel since 2014, many of which have also been challenged in court. The laws are intended to combat the pro-Palestinian boycott, divestment, and sanctions (BDS) movement against Israel, which aims to force Israel to withdraw troops from the West Bank and change its treatment of Palestinians by applying external pressure. In Arizona, Kansas, and Texas, federal district courts have previously ruled that those states’ anti-BDS laws were unconstitutional under the First Amendment. But each of these states later amended their anti-BDS laws to exclude individual contractors and apply only to larger contracts, mooting the legal challenges by excluding the plaintiffs in these cases from the purview of the amended statutes.

Arkansas’s Act 710

Arkansas’s Act 710, entitled “An Act to Prohibit Public Entities From Contracting With and Investing in Companies That Boycott Israel,” took effect in 2017. One of the bill’s drafters, Arkansas Rep. Jim Dotson, described the legislation as a reaction to the BDS movement.

The act prohibits state entities from contracting with a company unless the company certifies that “the person or company is not currently engaged in, and agrees for the duration of the contract not the engage in, a boycott of Israel[.]” The statute defines “boycotts of Israel” in three ways: as (a) “engaging in refusals to deal,” (b) “terminating business activities,” or (c) “other actions that are intended to limit commercial relations with Israel, or persons or entities doing business in Israel or in Israeli-controlled territories.” In this case, only the constitutionality of the third prong of this definition—covering “other actions”—was in dispute.

The act does not apply to contracts worth less than $1,000, or to companies that offer to provide the goods or services for at least 20 percent less than the lowest price quoted by a business that has complied with the certification requirement.

Precedent

The central precedential question at issue in this case, as well as prior First Amendment challenges to anti-BDS laws, concerns which of two Supreme Court decisions should apply to boycotts of Israel. The Arkansas Times relied on N.A.A.C.P. v. Claiborne Hardware Co. (1982), while the state argued that Rumsfeld v. Forum for Academic & Institutional Rights, Inc. (FAIR) (2006) should control.

Claiborne arose from an NAACP-organized boycott of local white-owned businesses in Mississippi intended to secure certain demands for desegregation and racial justice. In response, a group of white store owners sued to recover their lost earnings due to the boycott. The Supreme Court held that a state’s right to regulate economic activity “could not justify a complete prohibition against a nonviolent, politically motivated boycott.” The Court wrote that individuals participating in nonviolent boycott activity were entitled to First Amendment protection where it aimed to “effectuate rights” rather than to serve “parochial economic interests.”

In FAIR, the court ruled that several law schools’ refusal to allow military recruiters on campus in protest of the military’s “don’t ask, don’t tell” policy was not protected by the First Amendment. The FAIR court held that the refusal alone was “not inherently expressive,” since a neutral observer would have no way of knowing why the recruiters were not permitted absent accompanying explanatory speech.

Based on this precedent, the Eighth Circuit majority concluded that “[c]ontrary to Arkansas Times’s argument, Claiborne only discussed protecting expressive activities accompanying a boycott, rather than the purchasing decisions at the heart of a boycott.” Instead, under FAIR, purchasing decisions are non-expressive conduct because an outside observer would not understand the underlying political motives for the boycott. The majority wrote that “this case turns on what Act 710 bans: protected boycott-related activity, or only non-expressive commercial decisions.” If Arkansas’s anti-BDS law applied to constitutionally protected expression, it could survive strict scrutiny review only if narrowly tailored to advance a compelling state interest.

Does Arkansas’s Anti-BDS Law Violate the First Amendment?

The Arkansas Times argued that the third prong of Act 710’s definition of “boycott of Israel,” which covers “other actions that are intended to limit commercial relations with Israel,” included protected speech, such as picketing or advocating for boycotts of Israel. Overturning the panel decision, the Eighth Circuit ruled that the phrase “other actions” solely prohibits commercial activity that lacks expressive value. The court writes: 

Under Arkansas’s canons of statutory interpretation, we think the Arkansas Supreme Court would read Act 710 as prohibiting purely commercial, non-expressive conduct. It does not ban Arkansas Times from publicly criticizing Israel, or even protesting the statute itself. It only prohibits economic decisions that discriminate against Israel. Because those commercial decisions are invisible to observers unless explained, they are not inherently expressive and do not implicate the First Amendment.

To support this reading of the statute, the court relied on two canons of statutory interpretation. First, the majority employed a presumption that an ambiguous statute should be construed with a limiting interpretation that preserves its constitutionality. Second, the court applied the canon of ejusdem generis—the idea that a general residual term should be interpreted in light of the specific terms that precede it. The court reasoned that because the specific phrases listed before the “other actions” provision (“engaging in refusals to deal” and “terminating business activities”) related solely to commercial activities, it followed that the general phrase “other actions” did as well.

The majority also concluded that the act’s legislative intent favored the state’s interpretation of the statute. Noting that the legislature had expressed concern for the commercial viability of companies that refuse to do business with Israel, the court concluded that “the legislature’s motive for passing Act 710 was primarily economic.” The majority also acknowledged, though, that one of the legislative’s statements “suggests a broader purpose.” One of the six legislative findings included in the act stated that Arkansas sought to implement Congress’s “announced policy of ... support[ing] the divestment of state assets from companies that support or promote actions to boycott, divest from, or sanction Israel.”

Dissent 

In a lone dissent, Judge Jane Kelly argued that the act’s definition of “boycotts of Israel” included a broader array of conduct than only commercial conduct. Some of this conduct would be protected by the First Amendment, she claimed, including posting “anti-Israel signs, donating to causes that promote a boycott of Israel, encouraging others to boycott Israel, or even publicly criticizing the Act with the intent to ‘limit commercial relations with Israel’ as a general matter.”

While the majority began its analysis with a presumption of the statute’s constitutionality, Kelly argued that “it is incorrect under Arkansas principles of statutory interpretation to apply this canon before conducting a close reading of the Act as a whole to determine the legislative intent.”

Kelly made three arguments in dissent. First, she noted that, in order to determine whether a company is participating in a boycott of Israel, the act permits the state to consider as evidence the company’s “speech and association with others.” Since the state may refuse to contract with a company on this basis, the act “implicates the First Amendment rights of speech, assembly, association, and petition recognized to be constitutionally protected boycott activity.” 

Second, the dissent notes that the act’s codified legislative findings state that Arkansas seeks to divest state assets from “companies that support or promote” BDS measures. On this basis, Kelly concludes that the state “seeks to avoid contracting with anyone who supports or promotes” boycotts of Israel, infringing on protected expressive activity. Finally, the dissent argued that, because the pledge form presented to the Arkansas Times did not define “boycott,” a contractor could readily conclude that they were also prohibited from supporting or promoting a boycott of Israeli goods. 

Courts and Scholars Are Split on Anti-BDS Laws

The majority opinion in Arkansas Times v. Waldrip is a departure from how other federal courts have treated anti-BDS laws. In Arizona, Kansas, and Texas, federal district courts all held that boycotts against Israel involved protected expressive conduct and enjoined the states from enforcing the anti-BDS laws. In May 2021, a Georgia district court denied a motion to dismiss in a case challenging the state’s anti-BDS law, finding that the statute “imposes a condition on those who contract with the state of Georgia that implicates the contractor’s First Amendment rights” and could not survive strict scrutiny. However, in the aftermath of the decisions in Arizona, Kansas, Texas, and Georgia, the legislatures in each state passed bills amending the anti-BDS laws. Each state enacted changes to the laws that narrowed their scope so that they no longer applied to the plaintiffs, mooting the plaintiffs’ claims and vacating the district courts’ injunctions. As a result, no appellate court decisions on the merits were reached in these cases.

After Texas evaded an earlier challenge to its anti-BDS law by amending it to apply only to contracts over $100,000, the Council on American-Islamic Relations brought a new challenge on behalf of a Houston-based engineer, Rasmy Hassouna. In January 2022, a federal district court granted an injunction blocking Texas from enforcing the law against Hassouna. An appeal from this decision is currently pending before the U.S. Court of Appeals for the Fifth Circuit.

In Arkansas Times v. Waldrip and the pending Fifth Circuit decision, legal scholars have been sharply divided about the constitutionality of anti-BDS laws.

Writing in support of the state of Arkansas, three First Amendment scholars argue that decisions not to buy and sell goods or services are generally not protected by the First Amendment, and that this “is the foundation of the wide range of antidiscrimination laws, public accommodation laws, and common carrier laws throughout the nation.” Anti-BDS laws are controlled by the Supreme Court’s ruling in FAIR, they claim, which reflects the general principle that “[t]he First Amendment does not generally protect liberty of contract, whether or not one’s choices about whom to deal with are political.”

In an amicus brief filed on behalf of a group of First Amendment scholars, the Knight First Amendment Institute argues for a broader reading of Claiborne. They write that “Claiborne clearly held that the First Amendment covers political boycotts by consumers, not merely the speech associated with those boycotts.” FAIR is inapposite, they write, because it “is not a consumer boycott case” and does not overturn—or even cite—the holding in Claiborne that “political boycotts by consumers are inherently expressive.” These amici also claim that anti-BDS laws are distinguishable from ordinary public accommodations laws that prohibit discrimination against broad classes of people. They argue that, unlike public accommodations laws, anti-BDS laws are motivated by an intent to silence a particular form of expression based on its message and do not prohibit refusals to serve broad categories of people.