How business went 'DEFCON 1' in Arizona
By: Alexander Burns and MJ Lee
February 27, 2014 06:17 PM EST
As Arizona Gov. Jan Brewer prepared to make a career-defining decision – whether to veto a bill that would free business owners to discriminate on the basis of their religious preferences – a letter arrived at her office early this week with a stern warning from some of the biggest names in the local business community.
Signed by the heads of four Arizona business consortiums, with board members including officers of Bank of America, Intel and the Arizona Cardinals football franchise, the letter urged Brewer to strike down the measure known as S.B. 1062. The letter raised the prospect that the legislation could stain Arizona’s national reputation and touch off a wave of unpredictable litigation thanks to the bill’s broad, vague wording.
“We are troubled by any legislation that could be interpreted to permit discrimination against a particular group of people in the marketplace,” the missive read. “We all have a fervent desire for Arizona to be a welcoming, attractive destination for the top talent that will be the cornerstone of our continued economic growth.”
It was a sharp admonition from some of the groups – including the Greater Phoenix Chamber of Commerce and the Arizona Chamber of Commerce and Industry – that represent the tentpoles of the state’s economy. And over the next 48 hours, the private-sector pressure on Brewer just kept growing.
The Arizona legislation was an especially acute uproar over gay rights and religious liberty, but the larger dynamic at play there – pitting powerful business interests against ardent social conservatives – has played out over and over as the fight over same-sex marriage has spread across the country. In blue states like New York, big companies have played a pivotal role in pushing same-sex marriage measures into law. In battlegrounds like Virginia and now Arizona, corporate America has slowed or halted hard-right social policy from taking effect.
What Arizona proved, as much as any other in recent American politics, is that there’s currently no more powerful constituency for gay rights than the Fortune 500 list.
The corporate community’s engagement in the fight over S.B. 1062 was overpowering: American Express wrote to Brewer on Tuesday asking her to veto the law, according to a spokesman for the credit card company, which has a large presence in the state. JPMorgan, with its 11,000-odd employees in Arizona, said on Wednesday that the legislation “does not reflect the values of our country or the State of Arizona and should be vetoed.” The national bank Wells Fargo also opposed it, along with Apple, Marriott and other big corporations with significant Arizona-based investments.
The Arizona Super Bowl host committee, concerned about losing the 2015 championship that’s expected to generate a half-billion dollars in economic activity, joined in Wednesday with a public call for Brewer to veto the bill.
A few hours later, S.B. 1062 was dead; in her veto message, the governor decried the bill’s hazy language and declared it “could divide Arizona in ways we cannot even imagine” if it became law.
Business leaders in Arizona and Washington called the campaign to kill 1062 a moment of triumph for the corporate world, and a reflection of how the need to attract talented employees and project a tolerant image to consumers has overridden virtually any other political imperative businesses face in a state like Arizona.
“I’m not a military person, but it was a DEFCON 1 situation,” said Glenn Hamer, president of the Arizona Chamber of Commerce and Industry. “It would have been catastrophic, economically, if that bill had been signed.”
Hamer said that his group encouraged member companies to denounce the legislation and urged Brewer to use her veto to make a statement about Arizona. The governor was disinclined to sign the legislation from the start, said Brewer adviser Chuck Coughlin, but the overwhelming business outcry likely accelerated “the speed with which the decision was made.”
Arizona Sen. John McCain, who publicly and repeatedly urged Brewer to stop the legislation from becoming law, likened the eruption in his home state to the divisive upheaval there in 2010 over a restrictive immigration law that Brewer signed. This time, he said, the state stepped back from the brink.
“We were talking about losing the Super Bowl. Can you imagine the economic impact?” McCain said in an interview. “We saw that movie before with S.B. 1070. It took us a long time to recover from that.”
Outside Arizona, deep-pocketed business interests have repeatedly weighed in to support same-sex unions in state battles over the last few years. In Washington state’s 2012 same-sex marriage referendum, tech titans like Jeff Bezos and Bill Gates cut checks to support gay marriage. In New York, conservative financier Paul Singer helped boost Republican legislators who voted for same-sex marriage and Goldman Sachs CEO Lloyd Blankfein put his name on a letter endorsing legalized same-sex marriage.
In Virginia’s off-cycle elections last year, Democrats touted reports that the defense contractor Northrup Grumman considered leaving Virginia over hard-right opposition to employment protections for gay citizens. In Delaware, Democratic Gov. Jack Markell announced a successful campaign to pass a marriage equality law with the full backing of the DuPont corporation, the state’s most storied business institution.
Markell, a former Nextel executive who caused a national stir earlier this week by calling for the Super Bowl to be moved out of Arizona if S.B. 1062 became law, said any major business would be handicapped by even the perception of intolerance.
“These companies don’t care whether the talent is white or black or Hispanic or Asian or gay or straight. They just want to get talented people,” Markell said. “I think these businesses score big points when their employees see they’re willing to step up and speak out.”
The finance world has been particularly aggressive: Ahead of last year’s Supreme Court ruling on the Defense of Marriage Act, a host of major corporations, including international banks like Citigroup, Morgan Stanley and Goldman Sachs, filed a brief urging the justices to overturn the law.
American Bankers Association president Frank Keating, the former Republican governor of Oklahoma, said refusing service to consumers based on their sexual orientation is simply a nonstarter at this point for big companies. He likened the arguments for S.B. 1062 – that a religious conservative florist, for example, shouldn’t have to provide flowers for a gay wedding – to the mindset of racial segregation.
“If you’re in the public accommodations space, you take all commerce. If you don’t want to be in it, you don’t have to be,” said Keating, himself an opponent of same-sex marriage. “As a Catholic, I think marriage is between a man and a woman. But that doesn’t mean in the public accommodations space that if you disagree with me, that you can’t be served lunch.”
Todd Sears, a former investment banker and the founder of the “Out Leadership” and “Out on the Street” initiatives focused on LGBT equality in the business sphere, said the outcome in Arizona showed “there are economic consequences to discrimination.”
“You’re seeing corporations weighing in on the side of LGBT inclusion and social justice in a way that you would not have seen 10, 15, 20 years ago,” Sears said. “This is about good business and discrimination and helping our employees be better at their jobs.”
For Arizona-based executives, the battle over 1062 had an especially dark resonance. Multiple business leaders there, speaking before and after Brewer’s veto, likened this week’s showdown over gay rights and religious accommodation to the state’s debate in the 1980s and early ‘90s over whether to recognize the Martin Luther King Jr. holiday. When voters rejected the holiday in a referendum, the 1993 Super Bowl was relocated from Phoenix to California.
With that ugly episode very present in the minds of Arizona business leaders, along with the even more immediate and almost equally explosive 2010 debate over a restrictive immigration law that Brewer signed, several prominent Arizonans said 1062 was the last straw.
“Arizona’s legislature has, for the third time, given the state a black eye and has perpetuated what we believe is a false impression of Arizona,” said Mesa Mayor Scott Smith, a real estate developer and Republican gubernatorial candidate, ahead of Brewer’s veto Wednesday.
Smith said Arizonans had learned the lesson of the MLK Day dispute, when many in the state erred by reacting defensively against being lectured by “fat cats in New York.”
“This time, I think they realize this is serious,” he said. “If you’re going to be perceived as discriminatory and passing these statement laws [businesses will] go elsewhere.”
Former Arizona Gov. Fife Symington, a Republican who now works in private equity, said businesses were “terrific in terms of rallying behind the Arizona flag and encouraging the governor to do the right thing.”
“A lot of businesses and people who are thinking of moving here can’t help but be affected by these kinds of fights,” said Symington, who now supports same-sex marriage himself. “I think that the business community really has had enough.”