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Fifth Circuit parses Texas ban on boycotting Israel

Texas and 34 other states have adopted rules in solidarity with Israel against a protest of the country’s occupation of Palestinian territories.

(CN) — After 17 years of his company A&R Engineering contracting with the city of Houston, Rasmy Hassouna, a Palestinian-American from Gaza, found a new term in a renewal contract the city presented in October 2021 and refused to sign.

It contained what Hassouna calls a “loyalty oath” to Israel, a clause requiring him to certify his business is not involved in any boycott of the Middle Eastern country founded in 1948 by Zionists. Hundreds of thousands of Jewish people moved to Israel after they were uprooted from their homes by Nazi Germany’s persecution and mass genocide of Jews during World War II.

Texas and 34 other states have adopted laws, resolutions or executive orders known as anti-BDS measures.

Palestinians started the “boycott, divestment and sanctions” movement to protest Israel’s occupation of Gaza and the West Bank, Palestinian territories adjacent to Israel.

It advocates for refraining from doing business with the Israeli government or companies that benefit from Israel’s occupation of the territories and purported violations of Palestinians’ human rights.

Texas passed its anti-BDS law in 2017 but pared it down two years later in response to litigation, excluding sole proprietorships, companies with nine or less employees and contracts under $100,000.

Hassouna’s firm sued Houston and Texas Attorney General Ken Paxton in October 2021, seeking an injunction ordering the city to remove the clause from its contract offer and a declaration the law is unconstitutional.

While critics of the BDS movement often characterize it as anti-Semitic, Hassouna defies that label.

Though he boycotts the state of Israel and has attended peaceful protests of its treatment of Palestinians, his attorneys say he has several Israeli clients and Jewish friends.

“In fact, it was an Israeli client that helped Mr. Hassouna establish his business. Mr. Hassouna [doesn’t] ‘have a problem with Israeli people or Jewish people. The problem is with Israel’s policies and what they’re doing,’” his attorneys with the Council on American-Islamic Relations wrote in a brief. (Brackets in original.)

U.S. District Judge Andrew Hanen, a George W. Bush appointee, sided with Hassouna’s company and entered a preliminary injunction in January, enjoining Houston from including the anti-BDS clause in the contract and Texas from attempting to force its inclusion.

Paxton, a Republican, appealed to the Fifth Circuit. And with the appeal pending, Houston and A&R Engineering signed a three-year renewal contract without the clause.

Texas assistant solicitor general Eric Hamilton told a three-judge panel of the New Orleans-based appellate court on Monday that A&R’s claims against the attorney general should be barred by sovereign immunity.

To sidestep Paxton’s immunity, Hamilton argued, A&R has to show he has a duty to enforce the statute and has shown a willingness to do so. “He’s never done so with respect to the anti-boycott statute,” Hamilton said.

Hamilton explained Paxton’s inability to enforce is underscored by the fact Texas’ law has two parts, the one at issue, which applies to state and local government contracts, and another that requires Texas to divest in companies that boycott Israel.

The divestiture section “quite explicitly inserts the attorney general into the statute’s enforcement,” Hamilton said.

But the contract section “is silent on any role for the AG. It states that government entities have to include this language in the contract. And that’s it,” he added.

Besides, Hamilton asserted, a Fifth Circuit ruling that Texas’ law infringes on First Amendment freedom of expression by barring political boycotts would create a split with the Eighth Circuit.

The wording of the Lone Star State’s anti-BDS legislation is nearly identical to legislation passed by other states, as they are based on a template circulated by a lobbying group that receives funding from the Israeli government.

The Arkansas Times newspaper balked when the University of Arkansas—Pulaski Technical College asked it to certify, in accord with a state law, it was not boycotting Israel in a 2018 advertising renewal contract.

In an en banc ruling in June, the Eighth Circuit upheld Arkansas’ law, finding it does not run afoul of the First Amendment as it only bars commercial conduct, not expressive conduct like criticizing Israel.

But representing A&R Engineering before the Fifth Circuit on Monday, Gadeir Ibrahim Abbas of the Council on American-Islamic Relations’ Washington office said he believes Texas “gave the game away” by including language excluding “an action made for ordinary business purposes” in its law’s definition of boycotting Israel.

“You can boycott Israel under the Texas law … if you do so as part of an effort by suppliers to prevent certain types of Israeli products to enter the U.S. market, or do anything ‘made for ordinary business purposes,” Abbas said.

He argued this contradicts Texas’ claims the state’s anti-BDS law is valid under the First Amendment since, like Arkansas’ statute, it only prohibits economic conduct, as it clearly allows boycott-like activities for commercial reasons.

Abbas said the question is not as simple as whether boycotts are inherently expressive or not, as shown by the Supreme Court’s 1982 ruling in NAACP v. Claiborne Hardware Co.

In that case, the high court determined Black residents’ peaceful boycotts of stores owned by white merchants in Port Gibson, Mississippi – in a bid to pressure city officials to meet their integration demands – were protected, as such efforts for political change occupy “the highest rung of the hierarchy of First Amendment values.”

But U.S. Circuit Judge Andrew Oldham, a Donald Trump appointee, stated he believes Texas’ statute passes constitutional muster because it forbids anti-Israel boycotts by companies receiving taxpayer dollars in contracts with the state and local governments.

“The thing I can’t get my brain around is Claiborne talks all about the First Amendment protections that apply to boycotts, but there’s not a word … as far as I can tell, that says anything about your right to boycott anybody using government money,” Oldham said.

“So your clients are more than free to engage in whatever expression, viewpoint, boycott, whatever. You just can’t then go and turn around and get a contract with the city of Houston using government money,” he continued.

U.S. Circuit Judge Carl Stewart questioned how to distinguish A&R’s case from the Eighth Circuit’s decision upholding Arkansas’ similar statute.

“It’s the same kind of clause, same sort of arguments being made. So what do we do with it? How do we distinguish that? We got the same cases,” the Bill Clinton appointee said.

U.S. Circuit Judge Don Willett, another Trump appointee, rounded out the panel. The judges did not say when they would issue a ruling.

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