By Jody Godoy

A Manhattan federal judge dismissed a lawsuit against Unilever Plc on Tuesday that claimed the company misled U.S. investors by not immediately disclosing a decision by its Ben & Jerry's unit to stop selling ice cream in Israeli-occupied Palestinian territories.

A Michigan pension fund sued in June 2022, seeking damages for a drop in Unilever shares after Ben & Jerry's announced in July 2021 it would stop sales in the Israeli-occupied West Bank and parts of East Jerusalem.

U.S. District Judge Lorna Schofield ruled on Tuesday that Unilever was not required to disclose the boycott when Ben & Jerry's board decided on it in 2020 because Unilever had ultimate control over whether to implement it.

While Ben & Jerry's board oversees its social mission, Unilever retained authority over financial and operational decisions when it bought the ice cream company in 2000.

Schofield said the delay in announcing the board's resolution was likely "to determine what, if anything, to do about it."

An attorney representing the pension fund for fire and police in the Michigan community of St. Clair Shores and a Unilever spokesperson did not immediately respond to requests for comment.

The pension fund had sought damages for those who held Unilever American depositary receipts in July 2021, when they fell after several U.S. states reviewed their relationships with the British consumer goods company and some Jewish groups accused Ben & Jerry's of antisemitism.

Founded in 1978, Ben & Jerry's has long positioned itself as socially conscious. It said in July 2021 that selling ice cream in the occupied Palestinian territories was "inconsistent with our values."

Most countries consider Israeli settlements in those territories illegal, which Israel disputes. In 2022, Unilever sold its interest in Ben & Jerry's operations in Israel.

The Vermont-based ice cream maker sued to block the sale. The companies settled the dispute in December.

The case is City of St. Clair Shores Police and Fire Retirement System v. Unilever Plc et al, U.S. District Court, Southern District of New York, No. 22-05011.

(Reporting by Jody Godoy and Jonathan Stempel in New York; Editing by Cynthia Osterman)