Reclaim Democracy!

Appreciating Recent Victories for Citizens and Consumers Against Corporations

by

May 2024

Amid much horrific news this month, some major victories for citizens over corporate power have received little attention. Among the recent victories delivered by federal civil service agencies:

Non-compete Agreements
Lina Khan, President Biden’s selection to chair the Federal Trade Commission (FTC), has emerged as a civil service superhero, and it’s been delightful to follow the reactions of corporate mouthpieces to Khan fulfilling her role as an advocate for the public. In April, the FTC voted to ban non-competition contracts (“non-competes”) that corporations often impose on employees that prevent them from leaving to work for any competitor. 

While such agreements may be legitimate in rare instances involving intellectual property issues, the practice has been wildly abused and applied to positions like fast-food service, where no legitimate purpose is served. Some 30 million U.S. workers today are trapped by such involuntary “contracts,” leading to:

  • Limiting entrepreneurship (workers often are banned from starting a business that overlaps in any way with their previous job).
  • Suppressing wages. If workers are not free to work where they choose, corporations gain power, including power over compensation. “Non-competes” restrict workers’ ability to find new employment opportunities within a given field.
  • “Job Lock.” Noncompete clauses make it tougher for workers to advance their careers by limiting job mobility within their field. 

The Biden Administration claims the non-compete ban will raise wages by $400 billion over the next decade once the ban takes effect in August. Corporate advocates like the U.S. Chamber of Commerce have filed lawsuits to try stopping the rule from taking effect.

Credit Card Fees

In March, the Consumer Financial Protection Bureau (CFPB) finalized a rule limiting the penalty credit card corporations may impose for a single late payment to $8 (current averaging $32, exclusive of interest fees). It will take effect by late May, barring any successful legal challenge. 

The CFPB says late fees cost U.S. residents more than $14 billion a year and that 45 million Americans charged late fees will see an average savings of $220 a year.

The fee cap is part of the Biden administration’s campaign against “junk fees,” including air travel, event tickets and airline fees, which the FTC defines as “unnecessary, unavoidable or surprise charges that inflate costs while adding little to no value.“ The credit card fee cap also is under legal attack from financial corporations and their lobbying groups.

Blocking Anti-competitive Mergers

The FTC is joined by the Department of Justice in increasing vigilance over corporate mergers and acquisitions that would harm competition, small businesses, and consumers. A lawsuit by the DOJ succeeded in stopping the merger of JetBlue and Spirit Airlines, which would have reduced or eliminated competition on many travel routes.

Most recently (January 2024), the FTC sued to block a major hospital acquisition by Novant Health Corporation. The FTC said the merger would raise healthcare costs for patients and could likely harm quality of care.

While these wins have not fundamentally altered the power imbalance between citizens and corporations, they represent a sharp reversal from the last several presidential administrations. Let’s thank and encourage the people responsible for these actions while continuing to push for the  longer-term structural changes we’re working to achieve.

NorthWestern Energy Must Be Made Accountable to Ratepayers

by

By Larry Bean

Imagine a world where the law forces customers to buy from a single corporation. Imagine that same law guarantees profits for using expensive, outdated, and risky business practices. Worse yet, imagine this corporation chooses to emit dangerous toxic pollutants while hiding from public scrutiny. You need not imagine this scenario. It’s how NorthWestern Energy conducts business in Montana, and we customers deserve better.

The monopoly corporation is building an expensive, polluting methane-fired power plant along the Yellowstone River in Laurel and has managed to evade any meaningful public input thus far.  That is until April6, when District Judge Michael Moses ordered the construction of the plant be halted. Why? The health and environmental impacts that will surely come if this facility is allowed to operate were not properly considered. The Montana Department of Environmental Quality issued a permit based only on the inadequate data provided by NorthWestern.  

Laurel residents (and Billings residents downwind) will experience carcinogenic air pollution. State agencies tasked to protect our health and air quality have documented that the plant will emit toxic Hazardous Air Pollutants (HAPs) including formaldehyde, propylene, and benzene. 

Folks living within a few miles of the plant will contend with loud engine noise and overbearing industrial lighting all hours of the day and night, with this massive plant dominating what used to be an agricultural area. In fact, the plant’s site is still zoned for agricultural use, but that hasn’t stopped NorthWestern from continuing industrial construction without proper zoning permits.

Not only does the corporation want to keep us in the dark about the environmental impact its plant will have on the Yellowstone Valley, NorthWestern does not want us to know the full amount it will take out of the ratepayers’ pockets. 

NorthWestern already raised our rates last year, and it’s trying to get even more increases approved right now.  Bad business decisions like this expensive plant are part of the reasoning for rate increases.

Thus far, NorthWestern has barreled forward without meaningful public hearings or comment periods. What is the corporation hiding? And why is it building such an expensive, polluting plant when other responsible energy companies in our region are investing in reliable energy sources that are cleaner, safer, and more affordable? It’s because of a rigged system that the monopoly corporation is abusing. 

The technical term is “Return on Equity” or ROE. The state guarantees NorthWestern an 11 percent profit for building, operating, and maintaining power plants, creating incentives contrary to the interest of its captive customers.

Just think, the cost of the plant (estimated at a third of a billion dollars), maintenance and operation of very complicated internal combustion engines, and an increasingly expensive fuel for which this plant will compete and help to make prices even higher, all paid for by you and me, plus a guaranteed 11 percent profit.  

NorthWestern has brazenly abused its monopoly position, and this expensive methane-fired plant that will pollute the entire Yellowstone River valley is just the latest chapter. 

Because NorthWestern hasn’t given the community or any of its customers an opportunity to provide input, it’s important for us to be proactive in letting the utility hear directly from us. You can add your name to this letter to NorthWestern Energy executives and its board of directors, demanding the corporation give residents and customers a say in decisions about this plant.

Larry Bean is a Billings-based photographer, retired landscape architect, and a member of
Northern Plains Resource Council, a conservation and family agriculture organization.

How Amazon Wins: By Steamrolling Rivals and Partners

by

By Dana Mattioli
First published in The Wall Street Journal, Dec. 23, 2020

Jeff Bezos built Amazon.com Inc. from his garage with an underdog’s ambition to take on the establishment. He imbued staff with an obsession to grow fast by grabbing customers using the biggest selection and lowest prices. Today, he has more than 1.1 million employees and a market valuation around $1.6 trillion.

But Amazon never really grew up. Mr. Bezos still runs it with the drive of a startup trying to survive.

That ethos helps keep Amazon booming. Aggressive competition—including wresting market share from rivals—is often a hallmark of a successful business. It’s also why the tech-and-retail giant is the target of rivals, regulators and politicians who say its tactics are unfair for a company its size, and potentially illegal. As the company has grown, so has its capacity to take on an ever-growing array of competitors.

Bull Market
To keep customers happy, which Mr. Bezos has long said is Amazon’s fixation and growth strategy, executives behind the scenes have methodically waged targeted campaigns against rivals and partners alike—an approach that has changed little through the years, from diapers to footwear.

No competitor is too small to draw Amazon’s sights. It cloned a line of camera tripods that a small outside company sold on Amazon’s site, hurting the vendor’s sales so badly it is now a fraction of its original size, the little firm’s owner said. Amazon said it didn’t violate the company’s intellectual-property rights.

When Amazon decided to compete with furniture retailer Wayfair Inc., Mr. Bezos’s deputies created what they called the Wayfair Parity Team, which studied how Wayfair procured, sold and delivered bulky furniture, eventually replicating a majority of its offerings, said people who worked on the team. Amazon and Wayfair declined to comment on the matter.

Amazon set its sights on Allbirds Inc., the maker of popular shoes using natural and recycled materials, and last year launched a shoe called Galen that looks nearly identical to Allbirds’ bestseller—without the environmentally friendly materials and selling for less than half the price.

“You can’t help but look at a trillion-dollar company putting their muscle and their pockets and their machinations of their algorithms and reviewers and private-label machine all behind something that you’ve put your career against,” said Allbirds Co-CEO Joey Zwillinger. “You have this giant machine creating all these headwinds for us.”

An Amazon spokesman said the company’s shoe didn’t infringe on Allbirds’ design, adding that the company has previously said: “Offering products inspired by the trends to which customers are responding is a common practice across the retail industry.”

This year, Amazon has zeroed in on Shopify Inc., a fast-growing Canadian company that helps small merchants create online shops. Amazon has established a secret team, “Project Santos,” to replicate parts of Shopify’s business model, said people familiar with the project.

Amazon executives often initiated efforts like these on their own, though in some cases examined by The Wall Street Journal, Mr. Bezos himself was involved, according to former Amazon executives and internal emails.

From its start as an online bookstore 26 years ago, Amazon has expanded into an online retailer with a presence in nearly every major category. It is also the leading provider of cloud-computing services, a gadget maker, a major entertainment player and a rival to United Parcel Service Inc. and FedEx Corp. Mr. Bezos is the world’s richest man, with a net worth Forbes estimates at $187 billion.

He still exhorts employees to consider Amazon a startup. “It is always day one,” he likes to say. Day two is “stasis, followed by irrelevance, followed by excruciating, painful decline, followed by death.” Mr. Bezos originally considered calling his company Relentless, and www.relentless.com still redirects to Amazon’s site.

Mr. Bezos declined to be interviewed. Amazon declined to provide an overall comment on the topic of this article and responded only to specific examples.

Some rivals and partners say Amazon’s competitive zeal looks like unfair practices. The Journal this year reported that Amazon employees used data about independent sellers on its platform to develop competing products and that it has used the investment and deal-making process in ways that entrepreneurs and others said helped it develop products that competed with its would-be partners. Journal reporting showed how Amazon has limited some competitors’ ability to promote rival streaming devices and other gadgets on its dominant e-commerce platform.

Mr. Bezos in July testimony to the House Antitrust Subcommittee about the Journal’s private-label article, said: “I can’t guarantee you that that policy has never been violated.” The Amazon spokesman said the company doesn’t use confidential information that companies share with it in the mergers-and-acquisitions and venture-capital processes to build competing products. Amazon didn’t directly address the question of whether it hobbles rivals’ marketing, saying it is common practice among retailers to choose which products they promote.

The Justice Department last year launched a broad investigation of the market power of large technology companies including Amazon, and the Federal Trade Commission has oversight of Amazon as part of a broader look into the business practices of big tech. Europe’s antitrust regulators last month charged Amazon with violating competition law. Amazon said it disagreed with the allegations and would continue to engage with the commission.

In October, the House Antitrust Subcommittee concluded a 16-month investigation into tech companies with a report accusing Amazon of exerting “monopoly power” over sellers on its website. “It’s very clear that they use the enormous market power that they have to maintain dominance,” Rep. David Cicilline (D., R.I.), chairman of the subcommittee, said in an interview.

Amazon has denied exerting monopoly power. In response to the investigation, it published a blog post saying that “large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong.”

Amazon’s version
At its height about a decade ago, Pirate Trading LLC was selling more than $3.5 million a year of its Ravelli-brand camera tripods—one of its bestselling products—on Amazon, said owner Dalen Thomas.

In 2011, Amazon began launching its own versions of six of Pirate Trading’s top-selling tripods under its AmazonBasics label, he said. Mr. Thomas ordered one of the Amazon tripods and found it had the same components and shared Pirate Trading’s design. For its AmazonBasics products, Amazon used the same manufacturer that Pirate Trading had used.

Amazon priced one of its clone tripods below what Mr. Thomas paid his manufacturer to have Pirate Trading’s version made, he said. He determined it would be cheaper to buy Amazon’s versions, repackage and resell them than to buy and sell them on the terms he had been getting; he decided not to do that.

Amazon suspended Pirate Trading camera tripod models that competed with the AmazonBasics versions repeatedly, Mr. Thomas said, alleging his tripods had authenticity issues. Amazon rarely suspended the tripod models that didn’t compete with AmazonBasics versions, he said. In 2015, Amazon suspended all Ravelli products, he said, and even though the suspension ended, his company’s tripod business is now a fraction of the size it was. Mr. Thomas said he found being a seller on Amazon too risky and has largely pivoted to real-estate investing.

Several Amazon sellers said they have received notifications from Amazon, which has been battling fraud and fake goods on its platform, that say their products are used or counterfeit. Amazon suspends their selling accounts until they can prove that the products are legitimate, which can cause big sellers to lose tens of thousands of dollars each day, they said.

To turn their accounts back on, Amazon often requests that the sellers provide details on who manufactures their product along with invoices from the manufacturer so that Amazon can verify authenticity. Several sellers told the Journal they provided those details to Amazon to get their accounts reinstated, only for Amazon to introduce its own version of their products using the same manufacturer.

The Amazon spokesman said the company requests invoices when there is a counterfeit claim and doesn’t use information it requests about a seller’s manufacturer to procure private-label products.

CJ Rosenbaum, a lawyer who works on behalf of Amazon sellers, said some of them use intermediary “black box” factories to hide suppliers’ identities from Amazon: “They get the finished goods and ship them to a black-box factory who will ship their products to Amazon.”

‘Held as a prisoner’
More than half of all product searches start on Amazon’s search bar, according to some estimates, making it the de facto place for product discovery. For many sellers, Amazon represents the majority of their revenues.

“It’s literally like being held as a prisoner with Amazon,” said Billy Carmen, a Holly, Mich., seller of patio products, “and because of that there’s no place else companies like us can go to sell our products. Amazon uses that against us.”

The 62-year-old in late April sent Amazon invoices from his manufacturer because his account was under threat of suspension for counterfeit claims, even though he makes the product in question. He worries about the level of information Amazon has about his supply chain, though so far he hasn’t seen any Amazon-branded imitations on the site.

Mr. Bezos set out to make Amazon a destination where consumers can find everything they want and continues that push. “If a company is offering something that Amazon thinks they can do better, or can do less expensively, then they will try to do it,” said Patrick Winters, an Amazon Prime Video manager who left this summer to work for Albertsons Cos. after more than a decade at Amazon.

“That was Amazon’s philosophy from the start,” Mr. Winters said, “to basically have everything a customer wants even if it’s something only a few customers want.”

Quidsi, parent of Diapers.com and Soap.com, became a target a decade ago, when Amazon set up a team to focus on it, according to emails released as part of congressional hearings. Amazon wanted to know how the New Jersey e-commerce company could deliver bulky packages of diapers so quickly, said people familiar with the matter.

If you’re a new parent or caregiver, finding high-quality baby products can be a challenge. From diapers to the formula to baby wipes, there are so many different options to choose from. That’s why it can be helpful to try this baby subscription box, which delivers a curated selection of baby products straight to your door each month. With this service, you can discover new brands and products that you may not have known about otherwise. Whether you’re in the market for organic baby food or all-natural skincare products, a baby subscription box can help take the guesswork out of shopping for your little one. Plus, with the convenience of home delivery, you can save time and energy by having essential baby products delivered right to your doorstep. If you’re tired of sifting through endless options at the store, try this baby subscription box and discover a better way to get the baby products you need.

Amazon in 2009 developed a 12-step plan to take on Quidsi, according to the emails released by Congress. Action items in emails included “Beat or meet Diapers.com’s delivery speed” and “Beat or meet Diapers.com’s 6PM order time cutoff.” An internal email that year from a top Amazon retail executive called Quidsi “our #1 short term competitor,” and said: “we need to match pricing on these guys no matter what the cost.”

In a June 2010 email chain that included Mr. Bezos, a senior executive laid out tactics, saying “We have already initiated a more aggressive ‘plan to win’ against diapers.com in the diaper/baby space,” a plan that included doubling Amazon’s discounts on diapers and baby wipes to 30% off, and a free Prime program for new moms.

When Amazon cut diaper prices by 30%, Quidsi executives were shocked and ran an analysis that determined Amazon was losing $7 for every box of diapers, former Quidsi board members said. Senior Quidsi executives were even more surprised when, the day of the price cuts, Jeff Blackburn, a top lieutenant to Mr. Bezos, approached a Quidsi board member saying the company should sell itself to Amazon, said a person familiar with the matter. At that point, Quidsi wasn’t for sale and had big growth plans.

Editor’s Note: What’s described here — selling at a loss to eliminate a competitor is illegal, but. Like most corporate crime, has been ignored by Democratic and Republican administration’s alike. (Individual prosecution decisions theoretically are made by non-partisan civil servants.) Remarkably, the website of the Federal Trade Commision claims “Instances of a large firm using low prices to drive smaller competitors out of the market in hopes of raising prices after they leave are rare.” And racism no longer exists, either.

While the reporting here is excellent overall, we should ask why the media almost never seeks statements from those whose job it is to prosecute such crimes and ask their reasons for not enforcing the law).

Quidsi started to unravel after Amazon’s price cuts, said Leonard Lodish, a Quidsi board member at the time, missing its internal monthly projections for the first time since 2005. The company felt it had no choice but to sell itself because it couldn’t compete with what Amazon was doing and survive. Amazon bought Quidsi in 2010 for about $500 million. It shut down Diapers.com in 2017, saying it was unprofitable.

“What Amazon did was against the law. They were selling diapers for below cost,” said Mr. Lodish. “But what were we going to do? Sue Amazon for antitrust? It would take years and tens of millions of dollars and we’d be bankrupt by then.”

The Amazon spokesman declined to comment on the specifics of the Quidsi acquisition, saying Diapers.com wasn’t profitable when Amazon acquired it. Mr. Blackburn declined to comment.

Wayfair Parity Team
In 2016, Wayfair was an online retailer of furniture such as coffee tables and nightstands with $3.4 billion in revenue that year, compared with Amazon’s $136 billion. Amazon had less furniture selection than Wayfair, and its so-called S-team of senior vice presidents—some directly under Mr. Bezos—made the market a priority, said the people who worked on the team.

That year, Amazon launched its Wayfair Parity Team, which analyzed Wayfair’s business with the goal of eventually selling on Amazon 90% of furniture Wayfair offered, the people said. The team grew to around 100 people. It struggled to find Wayfair’s suppliers. Wary of competitors, Wayfair was buying items from manufacturers and rebranding them to mask their identity, said the people.

The team eventually identified the manufacturers by ordering Wayfair products to check manufacturing information and by going to trade shows to find Wayfair’s suppliers, they said.

Images from court documents show the West Elm Orb chair listing, left, and the Amazon Orb

In March 2018, Amazon began selling an “Upholstered Orb Office Chair” under its Rivet brand. 

Amazon didn’t stop Wayfair’s growth. The smaller company increased its share of online furniture sales in the U.S. to 25% last year from under 18% in 2016, according to market-research company 1010data—although Wayfair’s net loss also widened during the period. Amazon’s market share stayed steady, at just over half of online furniture sales, including its direct sales and those of outside vendors on its platform.

In the most recent quarter, Wayfair’s revenue grew 66.5% and the company posted its second consecutive quarterly profit after straight quarterly losses since its 2014 market debut.

The Amazon spokesman, while declining to comment on the Wayfair Parity Team, said part of earning customer loyalty is making selection and pricing as good or better than competitors’.

Williams-Sonoma Inc. successfully fought back against Amazon, which it claimed had copied a chair sold by its West Elm brand, known for its midcentury-modern furniture style. West Elm’s distinctive-looking orb dining chair was a particular hit, with more than $2 million in sales in the first 10 months of 2018, according to a complaint Williams-Sonoma filed in a lawsuit against Amazon over the incident, alleging patent infringement. In 2017, West Elm had filed a patent for the design of the chair.

The “Amazon Orb Chair is so highly similar that the ordinary observer would be confused by the imitation,” said the complaint. Williams-Sonoma’s complaint identified other furniture items that Amazon’s private-label team launched that looked nearly identical to designs it began selling earlier, including a coffee table and a few lamps.

Amazon removed the items from its website and settled the lawsuit in October, with a favorable outcome for West Elm, according to people familiar with the matter. Amazon and Williams-Sonoma declined to comment on the lawsuit.

Powerful tool
In targeting competitors, Amazon’s private-label team has access to a powerful tool: Amazon’s database of search terms customers frequently use. The team can add those terms to their product descriptions and detail pages to gain a boost on Amazon’s search engine, some former Amazon private-label employees said.

When employees on Amazon’s private-label team in 2017 launched its Goodthreads line of apparel such as military jackets and chino pants, they sought to create an aesthetic similar to that of J.Crew, one of the former employees said. Parent company J.Crew Group for years avoided selling on Amazon. J.Crew’s then-Chairman Mickey Drexler in a 2017 conference said he wouldn’t sell on Amazon because: “No. 1, they own the customer” and would “take every bestseller and put it into their private label collection.”

So the Goodthreads managers took steps to help searches for “J.Crew” show results that included Goodthreads, according to the person. Goodthreads is now one of Amazon’s top 10 private-label brands, according to e-commerce intelligence firm Marketplace Pulse.

The Amazon spokesman said Goodthreads targets an aesthetic common among multiple brands and isn’t unique to J.Crew. J.Crew declined to comment.

Shoe seller Allbirds, too, refused persistent Amazon efforts to get it to sell on the tech giant’s site, said Mr. Zwillinger, the co-CEO. The San Francisco startup launched its first shoe, “Wool Runner,” in 2016. It was the product of three years of research and development, using fabric from an Italian mill and a sole that was “carbon neutral,” produced with a Brazilian chemical company.

The lightweight shoe became an instant success. Amazon consistently contacted Allbirds between 2017 and 2019 to sell on its site, said Mr. Zwillinger. Allbirds always declined.

Allbirds’ team in mid-2017 began noticing that, on Google’s search engine, the top results for “Wool Runner” were knockoffs from outside vendors on Amazon, Mr. Zwillinger said. Allbirds believed Amazon was buying advertisements on Google to siphon demand for the shoes to itself, he said.

Mr. Zwillinger said it isn’t possible to track the damage to his company, but that “to see a company with the deep pockets of Amazon try to siphon off demand and give it to copycats is really frustrating.”

Then came the Galen shoe. Mr. Zwillinger said he believes search data guided Amazon’s decision to clone his hit product, which he said looks “eerily similar” to his shoe.

“I’m not saying whether they did or didn’t infringe. We didn’t get a lawyer involved,” he said. Because of Amazon’s size, he said, “it seems like that’s going to be an uphill battle that’s not worth fighting.”

Amazon’s Galen shoe.
The Amazon spokesman said that the company didn’t target Allbirds on Google advertising and that it was obvious wool shoes were trending.

Now, Amazon is targeting one of the biggest pandemic beneficiaries, Shopify, a platform that helps bricks-and-mortar stores set up online shops. With the coronavirus causing store shutdowns, many smaller retailers have invested in creating online stores using Shopify’s technology.

Small retailers on Shopify had aggregate sales of $5.1 billion over Black Friday weekend, topping Amazon’s $4.8 billion from its third-party sellers. Amazon won’t disclose how much it made in sales from its first-party business where it buys inventory and resells it. The 14-year-old Shopify’s share price has roughly tripled over the past year.

Amazon had largely dismissed the Canadian company internally, said employees on and off the project, but that has changed over the past year now that it looks like a significant threat. “It’s super high on our radar,” said one of the people.

At roundtables with its sellers, the people said, Amazon has learned that many had been defecting to Shopify because of increasing fees from Amazon, which on average collects 30% of each sale on its platform from outside vendors, up from 19% five years ago, according to the Institute for Local Self-Reliance. Shopify collects 2.9% plus 30 cents a transaction.

Earlier this year, Amazon created a top-secret task force dedicated to studying the Canadian company and copying parts of it, said the employees. To lead the team, Amazon tapped Peter Larsen, a longtime executive and vice president, consumer. Mr. Larsen recruited dozens of executives, who have signed nondisclosure agreements to work on the project. Internal chat boards are filled with other Amazon employees digging for information on “Project Santos,” the employees said.

Amazon and Mr. Larsen declined to comment on Project Santos. Shopify didn’t respond to requests for comment.

In October, the team presented its work to Mr. Bezos, who was enthusiastic that the project could help stem the defection of sellers to its Canadian rival, said the employees. Amazon hasn’t launched the project yet, they said.

Mr. Larsen’s direct reports have cryptic descriptions in their LinkedIn profiles about what they are working on. One lists “new things on the horizon,” while another writes “Good things are happening.”

Sebastian Herrera contributed to this article. Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 

FAIR USE NOTICE: This site may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. Such material is made available to advance understanding of ecological, political, human rights, economic, democracy, scientific, moral, ethical, and social justice issues, etc. It is believed that this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior general interest in receiving similar information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml  If you wish to use copyrighted material for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

Chevron Corporation Caught Scheming to Pit Minorities Against Greens

by

Corbin Hiar, E&E News
June 18, 2020

It was an audacious messaging campaign: White environmentalists are hurting black communities by pushing radical climate policies that would strip them of fossil fuel jobs.

The email to journalists, sent by a public affairs firm at the height of national protests over systemic racism earlier this month, accidentally contained the name of a high-profile client.

It was Chevron Corp.

The Virginia-based communications firm, named CRC Advisors, urged journalists to look at how green groups were “claiming solidarity” with black protesters while “backing policies which would hurt minority communities.”

“Despite this claimed solidarity, environmental organizations, composed of predominantly white members, are backing radical policies like the Green New Deal which would bring particular harm to minority communities,” wrote John Gage of CRC in an email sent to media outlets including E&E News.

The story pitch included an offer to connect journalists with black conservatives who oppose the Green New Deal, a sweeping government jobs program advanced by progressive lawmakers who champion environmental justice issues for communities of color.

The email ended with a revealing tagline.

“If you would rather not receive future communications from Chevron, let us know by clicking here.”

Chevron denied involvement in the messaging campaign, but the email’s accidental nod to the oil giant is renewing suspicions among activists and academics that Chevron’s public statements about climate change fail to match its lobbying activities. While Chevron has promised to do more to slow rising temperatures, observers view the email as a shadowy continuation of the fossil fuel industry’s past efforts to undercut legislation aimed at reducing greenhouse gas emissions.

“Chevron’s fingerprints appear to be on this,” said Naomi Oreskes, a Harvard University history professor and the co-author of “Merchants of Doubt,” a 2010 book about how scientists with ties to Big Oil worked to obscure the truth about global warming.

Oreskes described previous instances of oil and gas companies working with communications firms to advance industry talking points. But the CRC effort is remarkable, she said, for trying to leverage national unrest about systemic racism and police violence to promote an expansion of oil and gas drilling.

“There’s no socially acceptable language to describe how despicable this is,” she said. “It’s hard for me to contain my fury.”

Chevron, a longtime CRC client whose shareholders recently called on the oil major to detail its lobbying on climate change, says it had nothing to do with the message.

“Thanks for the opportunity to clarify the situation,” Chevron spokesman Sean Comey said in an email.

‘A clerical error’

The email received by an E&E News journalist on June 3 included quotes from two black conservatives who oppose the Green New Deal.

They were Ken Blackwell, a Republican who served as Ohio’s secretary of state in the late 1990s and has gone on to stump for a wide variety of conservative causes, and Derrick Hollie, a former advertising executive.

The email portrayed CRC as playing a helpful role in distributing Blackwell’s and Hollie’s concerns with the climate plan and its effect on black communities.

Instead, the firm appears to have organized the campaign. Hollie, who said he doesn’t personally know Blackwell, revealed that CRC approached him with the idea.

“They was like, ‘Derrick, would you mind being a part of something that we’re working on?’ I said, ‘Absolutely.’ And they asked me to put together a quote,” Hollie said in a phone interview.

“I didn’t know what they were going to do with it,” he added. “I figured they were going to put it in an op-ed or something like that.”

Gage, the account executive at CRC, said in an email to E&E News that he had contacted journalists “on behalf of Mr. Blackwell and Mr. Hollie regarding this issue and inadvertently attached a disclaimer from another client’s media list onto that email.”

“This was, in effect, a clerical error,” Gage said.

The Green New Deal is a conceptual resolution that calls for a sweeping public jobs program and asserts that the government should “achieve net-zero greenhouse gas emissions through a fair and just transition for all communities and workers” in a decade’s time.

That would require overhauling the nation’s oil-dependent transportation system “to remove pollution and greenhouse gas emissions” and invest in “zero-emission vehicle infrastructure and manufacturing; clean, affordable, and accessible public transit; and high-speed rail,” the proposal says.

Chevron hasn’t directly lobbied on the Green New Deal, but it has pressed members of Congress and the Trump administration about “Energy Transitions, technology, and climate change,” lobbying disclosures show.

Energy prices — another major focus of the CRC pitch — are also an issue Chevron has lobbied on.

“Radical policies like the green new deal that raise the cost of driving to work and heating our homes would target the African-American community and … would make us even more vulnerable and marginalized than we already are,” Blackwell said in the email sent by CRC. He is currently an adviser to Trump’s reelection campaign and senior fellow at the Family Research Council, an anti-abortion group.

Blackwell’s quote was partially featured in the headline of a June 4 story on the website of the conservative The Daily Wire.

‘White environmental extremists’

Hollie is the president of Reaching America, a nonprofit group whose tax-exempt status was revoked by the Internal Revenue Service in 2017 because it repeatedly failed to file required annual reports.

Since then, Hollie has testified twice in the House Natural Resources Committee against efforts to transition the U.S. economy away from fossil fuels. At a February 2019 hearing, he denied receiving any funding from fossil fuel companies or corporations.

“With black communities ablaze, the same nearly uniformly white environmental extremists assure us of their solidarity while at the same time trying to kill high-paying oil and gas jobs that have been the cornerstones of progress in lifting up working-class minority communities,” Hollie was quoted as saying in the CRC email to journalists. “Any program such as their Green New Deal that makes energy more expensive or jeopardizes jobs is counter-productive, reckless, and wrong.”

To be sure, the environmental movement has struggled with its own racial disparities. The largest green groups are overwhelmingly white, and they have historically overlooked communities of color when trying to reduce pollution. Some have racist pasts (Greenwire, June 5).

But people of color are also underrepresented in much of the oil and gas industry. For example, a 2016 report by the University of Massachusetts, Amherst, found the oil and gas business to be “among the worst in terms of employment and earning equity for women, African American and Hispanic populations.”

Reaching America is based in Bennsville, Md., but its sparse website is registered to Domains By Proxy LLC, an Arizona firm that shields the identities of web address owners.

CRC also has a limited online presence.

The group is led by Leonard Leo, President Trump’s informal adviser on judicial nominees, and Greg Mueller, a conservative communications executive. The firm recently hired two Trump White House communications staffers and a Fox News veteran. CRC’s website lists no staff, clients or contact information.

Although Hollie and his group have a long history with CRC, he denied having a formal role with the firm.

“Hell no! I wish I did,” he said with a laugh. “This guy named Jay Hopkins is who I deal with.

“I knew CRC had an energy client,” he added. “I didn’t know it was Chevron.”

Hopkins, a senior account manager at CRC, has deep ties to the fossil fuel industry.

Prior to working at CRC, Hopkins did communications for Citizens for a Sound Economy, a think tank established in 1984 by the oil barons Charles and David Koch. The group eventually split and formed the tea party groups FreedomWorks and Americans for Prosperity.

In 2002, Hopkins joined CRC, which was previously known as Creative Response Concepts and CRC Public Relations.

During his time at CRC, he “identified and recruited third-party organizations to serve as surrogates for clients,” “wrote and placed client op-eds in top-line publications,” and “cultivated strong relationships with journalists nationwide, particularly focusing on reporters in energy,” according to his LinkedIn profile.

Blackwell, the former Ohio secretary of state, has written numerous op-eds over the years in support of the U.S. oil and gas industry as well as Chevron and other CRC clients.

In a 2012 Reuters blog post, Blackwell described Brazilian authorities’ attempt to penalize Chevron for a 3,600-barrel oil leak off the coast of Rio de Janeiro as “one of the most shameless shakedowns of an American company by another country in recent memory.”

After a two-year legal battle, a federal judge in Brazil ordered the California-headquartered company to pay around $135 million in compensatory actions (Greenwire, Oct. 2, 2013).

Blackwell didn’t respond to calls or emails for comment. Hopkins didn’t respond to emailed questions about his work at CRC.

Hollie, meanwhile, said that Reaching America works with organizations across the political spectrum.

“I don’t appreciate being used as a racial pawn during this time and would appreciate if you leave me out of your vendetta against Chevron and CRC,” he said in a follow-up email.

‘Not being candid’

Experts on corporate influence campaigns suggest that CRC is engaged in a shadowy campaign to shape federal policy on climate change.

The firm may be “attempting to influence public policy surreptitiously using industry money,” said Marcus Owens, a partner at the law firm Loeb & Loeb LLP. “I’ve been doing this for nearly 50 years now, so I think I have a fairly well-developed sense of who’s not being candid.”

The involvement of the former Ohio secretary of state, in particular, was an indicator for Owens, the former head of the nonprofit division at the IRS.

“You don’t hire Ken Blackwell if what you want to do is run a soup kitchen or truly educate people about anything,” he said. “You hire him if you want to run a political organization and you want to court industry or people who donate to right-of-center causes.”

What CRC did is a textbook example of the “most unethical type of PR,” according to Pallavi Kumar, a communications professor at American University.

“It’s just a way where they put together a coalition and therefore you think it’s something, but it’s done by a corporation,” said Kumar, who worked in corporate public relations for two decades before becoming an academic. “To me, they really screwed up by showing it’s coming from Chevron.”

Kumar got her start in PR at E. Bruce Harrison Co., which helped promote the Global Climate Coalition. Prior to its dissolution in 2002, the industry group was opposed to reducing greenhouse gas emissions and was supported by Chevron. (Kumar says she did not work on that account.)

The oil major’s ongoing involvement with CRC is troubling to some of the company’s shareholders.

“If Chevron is hiring public relations companies that are putting out a message that is contrary to what the company is publicly espousing, that is a concern,” said Danielle Fugere, the president of As You Sow. “Just hiring these individuals or these groups for public communications purposes raises red flags.”

Her shareholder advocacy group backed a climate lobbying proposal put forth by the French investment group BNP Paribas Asset Management at Chevron’s annual shareholder meeting last month.

It called for the oil company’s board of directors to issue a report describing “if, and how, Chevron’s lobbying activities (direct and through trade associations) align” with the goal of the Paris Agreement, which calls for limiting average global warming to well below 2 degrees Celsius.

Chevron’s board urged shareholders to vote against the resolution because the company “shares the concerns of governments and the public about climate change risks” and “adheres to the highest ethical standards when engaging in lobbying and political activities.”

A majority of its investors, however, backed the proposal (Energywire, May 28).

Comey, the Chevron spokesman, indicated that the company doesn’t plan to detail its work with CRC in the climate lobbying report shareholders requested.

“They help us with communications,” he wrote, referring to CRC. “They are not involved in lobbying.”

Kumar, of American University, described CRC’s work this way: “Stealth lobbying, AstroTurf lobbying, front groups.”

While those tactics aren’t new, the focus of the campaign surprised her. The firm is trying to take advantage of the Black Lives Matter movement, she said.

David Pellow, the African-American director of the University of California, Santa Barbara’s global environmental justice project, argued that Chevron’s involvement with CRC shows the oil company is more focused on countering support for the Green New Deal than helping communities of color.

With the U.S. in recession and tens of millions of Americans out of work, “the Green New Deal is now looking much more reasonable as a proposal,” he said. “And that’s got to have big polluters worried.”

Chevron has been criticized for its slow response to the widespread protests over police violence against people of color. The company released a statement on racial injustice on June 5 — two days after CRC pitched a story attacking a resolution that seeks to address that issue and combat climate change.

Comey said that “it’s important that we face and address the systemic racism and discrimination that denies African Americans equal access to opportunities for advancement.”

Chevron, he added, is leading by example: “For more than 25 years, diversity and inclusion have been a part of our corporate culture.”

But Pellow, who is also the chairman of UC-Santa Barbara’s environmental studies department, said the company’s actions speak louder than its words.

“If you’re perpetrating climate disruption, as Chevron is, then you’re also perpetrating racial injustice,” he said. People of color “the world over are being harmed disproportionately by climate change.”

© 2020 E & E News

FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of criminal justice, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a fair use of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.

Nike – Just Don’t Do It

by

By Jeff Milchen and Jeffrey Kaplan
First published by TomPaine.com April 26, 2003

If big business hopes to regain the dwindling trust of Americans, claiming the right to lie is hardly the way to do it.

Yet, Nike Corporation lawyers argued just that claim to U.S. Supreme Court justices in Nike v. Kasky. They hoped the court would overturn a California Supreme Court decision denying Nike’s privilege to “plead the First” (Amendment) when charged with violating state anti-fraud laws. The case was settled out-of-court, failing to rule on the constitutionality of misleading statements made by corporations.

In the face of increasingly unfavorable publicity in 1996 and 1997, Nike conducted a public relations blitz to convince people it had cleaned up its subcontractors’ notorious “sweatshops.” But Californian Marc Kasky didn’t buy it. He claimed Nike continued lying about its practices and sued the corporation under California consumer protection laws.

Rather than refuting Kasky’s charges, Nike instead challenged the legitimacy of the truth-in-advertising law itself. The corporation’s attorneys argued the PR campaign was about more than the company’s practices, did not promote specific products, and should be considered fully protected political speech and not less-protected commercial speech. Furthermore, to hold Nike liable for false information, they claim, would unconstitutionally snuff the company’s “speech.”

But corporations already are legally obliged to issue accurate statements to investors. Experts at a Bitcode Prime official UK company confirm that when companies withhold important information or lie to investors, they can be sued and the officials involved can be held personally liable. If Nike executives contested the constitutionality of those standards, Wall Street and the mass media would laugh at them. So why should deception in non-financial communications be exempted?

Corporate officials can make mistaken predictions, like how a new product will sell or an upcoming merger will strengthen the company, without fear of being sued — as long as they don’t intentionally deceive (for example, by concealing evidence that a product is malfunctioning). This is a reasonable standard for all non-financial issues.

But Nike went out of its way to legally cement its ability to speak deceptively, a claim for which no Constitutional justification exists.

Corporations should not enjoy the same rights as humans. The word “corporation” is entirely absent from the Bill of Rights and Constitution; and for good reason. People should be held in higher esteem than companies. We have rights because we exist whether or not we create governments.

Corporations, on the other hand, are creations of the state and have privileges, not rights. The privileges of incorporation, such as unlimited lifespan and limited liability, permit corporations to amass power far beyond what an individual can attain.

Corporations are not people.

So some counterbalances to the excesses of corporations are necessary. Without such controls, corporations can threaten the functioning of democracies, like dominating ballot initiatives. If the Supreme Court ruled corporations enjoy fully protected political rights, the already-weakened powers of democratic governments and their citizenries would be further eroded.

We should also limit corporate “freedom,” as corporations can and do use their privilege to harm people for profit. For years, tobacco company officials claimed, even in testimony before Congress, that smoking wasn’t a serious health risk. As it turned out, they were blatantly lying and as a result, were hammered with massive class-action suits.

In Kasky v Nike, Nike’s lawyers framed the debate as if the company was sued for misleading people about broader issues of economic globalization. But Kasky accused Nike of lying in verifiable statements about production practices.

Corporations need not be perfect, but they must be held accountable to standards of truth — especially because corporations are nothing more than legal entities created by (and regulated by) our governments. Businesses should earn the public trust by showing the same respect for everyone else as it does investors.

The Supreme Court had an opportunity to reject the extreme judicial activism Nike encouraged, as well as clarify the Bill of Rights protects human liberty and doesn’t shield corporations from public accountability. Instead, the Supreme Court punted this decision, sending the case back to a lower court.

It’s only a matter of time until the next corporation challenges the limits of free speech. Now, with a court increasingly filled with big-business allies, we should all worry.

Jeffrey Kaplan and Jeff Milchen are a volunteer and founder, respectively, with Reclaim Democracy!

Additional Resources

On Sales Tax, Amazon Wins Even When it Loses

by

Jeff Bezos, with a knowing look

By Jacob Weisberg
First published in Slate

Amazon has built its empire on the legitimate advantages it has over retail shopping: an endless range of products at steep discount, personalized recommendations, and stunningly good customer service. It has also benefited from one enormously unfair advantage over its bricks-and-mortar competitors: It doesn’t have to charge sales tax. Depending on where you live in the United States, this can save you nearly 10 percent on purchases—making it foolish not to buy online when you have the choice.

Twenty years after Amazon was founded, Congress is finally addressing this loophole with a bill that would allow states to require e-tailers to collect tax. What’s interesting about this is not the substantive debate around the Marketplace Fairness Act of 2013, which is expected to pass the Senate next week. There really isn’t any: Even Amazon concedes in principle that the playing field ought to be leveled. What’s interesting is what the delay tells us about a political system so compromised and sclerotic that it can’t correct even the most straightforward economic unfairness in a timely fashion.

Cyberbusinesses have been able to avoid collecting sales tax based on state laws dating from the era when shopping locally was the norm. Companies without a “physical presence” in a state didn’t have to charge tax if they shipped goods from elsewhere. Instead, it was up to customers to pay equivalent “use taxes” on their purchases. In practice, few customers have ever been scrupulous enough to do so, giving the lie to the commonplace that the American tax system, unlike that of Greece, works on the basis of “voluntary compliance.” In the case of sales taxes, states have no mechanism to track dodgers, so no one pays.

As its business expanded, Amazon’s CEO Jeff Bezos treated this anomaly as an inherited right and deployed the classic techniques of rent-seeking to protect his advantage. He spent millions of dollars per year on lobbyists, deployed an army of lawyers, and cultivated political allies with large campaign contributions. Diffuse and vulnerable, the mom-and-pop shops disrupted by Amazon lacked the capacity to make their case effectively. Nor was there any customer constituency for tax collection, even though the same consumers paid indirectly through diminished public services.

At the state level, Amazon became a litigious bully, an instance of the modern corporation powerful enough to dictate terms to impoverished sovereigns. When challenged over the collection of taxes, it warned that it could take thousands of jobs elsewhere. As California teetered near bankruptcy a few years ago, Amazon cut ties with local affiliates and threatened to fund a public referendum to overturn the legislature’s decision to make it pay tax. Its strategy devolved into simply delaying the inevitable for as long as possible. When a state looked likely to win in court, Amazon would negotiate and agree to collect taxes, provided that it didn’t have to start for a few more years.

In this cynical game, Amazon has been able to count on the connivance of congressional Republicans who stand for the proposition that representation without taxation is liberty. A principled conservative believes that taxes should be low, consistent, and fair. An American Republican, by contrast, acts out of the belief that both taxation and the effective collection of revenues are government abuses. This ideology is codified in the anti-tax pledge most of the GOP has signed for the libertarian commissar Grover Norquist, whose organization Americans for Tax Reform leads the opposition to taxing e-purchases.

This anti-tax ideology grabs for any argument at hand. In the old days, it was that taxing e-commerce would kill the just-aborning Golden Goose of the Internet. More paranoid elements on the right suggest that allowing states to collect sales taxes was a step on the road to a national value-added tax. Others assert that compliance counts as too much of a burden on small business, which could be victimized by endless state-level tax audits. In fact, proposed legislation has always envisioned an exception for merchants who sell less than $1 million a year in goods. In the past, Amazon’s lobbyists have worked to make the proposed threshold lower, in order to give validity to the argument that compliance would be a burden.

What has now changed? Essentially, Amazon has become so dominant that it no longer cares to fight, leaving its worn-out briefs to eBay and Overstock.com. It has played out the clock longer than it dared hope and would now like to be able to build warehouses everywhere without doing state-by-state battle over its “physical presence.” In other words, this is not a case of Congress finally choosing to act. It’s a case of the owners finally giving it permission to do so.

A different version of this piece appears in the Financial Times.

For more, see the American Independent Business Alliance’s comprehensive resource on state sales tax and internet exemption reform.

image courtesy jurvetson