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Michael Moline, Florida Phoenix
The Walt Disney Co. asked a federal court Wednesday to block Gov. Ron DeSantis’ “targeted campaign of government retaliation” against the company, alleging violations of multiple constitutional rights because it spoke out against the governor’s position on LGBTQ rights.
“A targeted campaign of government retaliation — orchestrated at every step by DeSantis as punishment for Disney’s protected speech — now threatens Disney’s business operations, jeopardizes its economic future in the region, and violates its constitutional rights,” a 77-page complaint filed in the U.S. District Court for the Northern District of Florida asserts.
“Disney regrets that it has come to this. But having exhausted efforts to seek a resolution, the company is left with no choice but to file this lawsuit to protect its cast members, guests, and local development partners from a relentless campaign to weaponize government power against Disney in retaliation for expressing a political viewpoint unpopular with certain state officials,” it adds.
DeSantis went on the attack after Disney issued a public statement opposing his Parental Rights in Education Act, also known as “Don’t Say Gay,” limiting discussion of sexual orientation and gender identity in kindergarten through third grade. Lawmakers have been moving to expand the program to PreK to 8th grade through legislation. In addition, the education bureaucracy now has extended that prohibition throughout high school.
DeSantis accused the company of throwing its economic weight around in defiance of “the people’s will” to prevent indoctrination of children with LGBTQ+ content.
At the governor’s urging, the Legislature created the Central Florida Tourism Oversight District to replace the Reedy Creek Improvement District, a special taxing district that Disney controlled for decades. Just before dissolving, Reedy Creek voted to preserve much of Disney’s self-governance authority.
The trigger
Infuriated, DeSantis vowed to undo that vote, which the new district did on Wednesday. That triggered the lawsuit, Disney said.
“The governor recently declared that his team would not only ‘void the development agreement’ — just as they did today — but also planned ‘to look at things like taxes on the hotels,’ ‘tolls on the roads,’ ‘developing some of the property that the district owns’ with ‘more amusement parks,’ and even putting a ‘state prison’ next to Walt Disney World. ‘Who knows? I just think the possibilities are endless,’ he said,” the brief recounts.
“This government action was patently retaliatory, patently anti-business, and patently unconstitutional. But the governor and his allies have made clear they do not care and will not stop,” the complaint reads.
The complaint names DeSantis, acting Florida Department of Economic Opportunity Secretary Meredith Ivey, five members of the Central Florida Tourism Oversight District, which oversees Disney property in the Orlando area, plus the district’s administrator.
Relief sought
The document asks the court to declare that legislation dismantling, is:
Invalid and unenforceable because it violates the company’s contract rights.Violates the U.S. Constitution’s Takings Clause because it reduces Disney’s property rights without just compensation.“An arbitrary and irrational voiding” of Disney’s agreements with the state in violation of the Due Process Clause.
The complaint also asks the court to the laws setting up the new district and that panel’s vote in Wednesday are “unlawful and unenforceable because [they were] enacted in retaliation for Disney’s speech in violation of the First Amendment.”
Disney notes in its complaint that it paid $1.1 billion in taxes last year and employs 75,000 people in Florida.
DeSantis has been abroad this week visiting Japan, South Korea, Israel and the U.K. His office issued a written statement from communications director Taryn Fenske, saying, “We are unaware of any legal right that a company has to operate its own government or maintain special privileges not held by other businesses in the state. This lawsuit is yet another unfortunate example of their hope to undermine the will of the Florida voters and operate outside the bounds of the law.
Some history
The brief recounts the history of DeSantis’ campaign against Disney, starting when the company’s then-CEO Bob Chapek called the governor to express concern about the pending Parental Rights bill. DeSantis, the document says, told Chapek, “You shouldn’t get involved[;] it’s not going to work out well for you.” Later, the DeSantis gubernatorial campaign sent an email accusing “Woke Disney” of “echoing Democrat propaganda.”
Disney nevertheless issued a public statement:
“To ALL who come to this happy place, welcome. Disney Parks, Experiences, and Products is committed to creating experiences that support family values for every family, and will not stand for discrimination in any form. We oppose any legislation that infringes on basic human rights, and stand in solidarity and support our LGBTQIA+ Cast, Crew, and Imagineers and fans who make their voices heard today and every day.”
“Gov. DeSantis signed House Bill 1557 [the parental rights bill] into law on March 28. That day, The Walt Disney Co. issued a statement expressing its views that the legislation ‘never should have been signed into law,’ that its ‘goal as a company is for this law to be repealed by the [L]egislature or struck down in the courts,’ and that The Walt Disney Co. ‘remains committed to supporting the national and state organizations working to achieve that,’” the brief reads.
Subsequently, DeSantis declared that Disney had “crossed the line.”
“Gov. DeSantis’s memoir attacked Disney’s speech and petitioning activity for expressing the wrong viewpoint,” the brief continues. “’In promising to work to repeal the bill’ he asserted, ‘the company was pledging a frontal assault on a duly enacted law of the State of Florida.’ As a consequence of its disfavored speech and petitioning, he declared, ‘[t]hings got worse for Disney.’
“The governor promptly began his campaign of punishment.”
Evidence trail
The brief cites DeSantis’ book, “The Courage to Be Free,” plus statements by the governor’s legislative allies and then-press secretary Christina Pushaw, to describe a chain of retaliatory threats.
“Indeed, Gov. DeSantis has reaffirmed, again and again, that the state campaign to punish Disney for its speech about House Bill 1557 has been a coordinated and deliberate one from the start. Disney’s commentary on House Bill 1557 was, he claimed, a ‘declaration of war’ and ‘a textbook example of when a corporation should stay out of politics.’”
Lawmakers never fully scrutinized the effect the Reedy Creek dissolution bill would have on the district’s employees and bond rating or on local municipal governments, according to the brief.
“The same day the bill was signed, credit-rating agency Fitch Ratings placed [Reedy Creek’s] approximately $1 billion in outstanding bond debt on ‘rating watch negative’ based on ‘the lack of clarity regarding the allocation’ of RCID’s assets and liabilities,” it recounts.
Osceola County taxpayers, worried lest the dissolution force tax increases worth as much as $2 billion, filed suit against the state. It took months for the administration to announce a plan for the successor district, one with leadership that DeSantis would appoint subject to Senate confirmation.
Under Reedy Creek, property owners within the district elected board members according to the acreage they owned, a system that favored Disney but common for special districts.
“Despite the state’s escalating retaliation, Disney sought de-escalation, including through several attempts to spark a productive dialogue with the DeSantis administration. It was to no avail. The threatening political action and rhetoric continued — and escalated further. So, amid great uncertainty, Disney and [Reedy Creek] sought to secure future development plans that had been mutually arranged,” the brief says.
Development agreement
Those were a development agreement and restrictive covenant that Reedy Creek approved before its dissolution. They were intended, the brief says, to protect planned investments of up to $17 billion to create 13,000 jobs over the next decade. And they complied with long-established Florida law, including public notice and a public vote.
“Development and investment of this magnitude cannot effectively take place when it can be nullified or undermined at the whim of new political leadership,” the brief says.
The brief asserts that these agreements do nothing to weaken the successor district’s authority to assess taxes, control floods, maintain roads, set building codes, and approve construction, among other powers. They do allow Disney to continue the comprehensive growth plan the state approved last year, which specifies the amount of commercial and hotel space allowed and provides for the development of additional theme parks. And they restrict the successor district from using Disney’s intellectual property without permission.
According to the brief, DeSantis was attempting to assert control over Disney’s entertainment content, saying, “When you lose your way, you’ve got to have people that are going to tell you the truth … So we hope they can get back on.” He suggested the new board “could stop Disney from ‘trying to inject woke ideology’ into children,” and said, “I think all of these board members very much would like to see the type of entertainment that all families can appreciate.”
Once the new board learned of the development agreements, the brief says, board member Bridget Ziegler complained the company was “ignoring parents and allowing radicals to sexualize our children,” and was “now ignoring Florida taxpayers by sneaking in a last-minute sweetheart development agreement.”
Criminal probe
DeSantis himself, amid press reports that Disney had outfoxed him, launched a criminal and civil investigation into the possibility that the company had “tried to pull a fast one.” He also proposed legislation to nullify the agreements and prompted the action that the new board took Wednesday to spike them.
“The purpose and effect of this exercise of power is the same as the legislation and executive activity that has been deployed for over a year — to punish Disney for expressing a certain view,” the brief says.
The anti-Disney campaign violates the U.S. and Florida constitutions’ ban on interference with private contracts, the brief asserts.
“Just as in other long-term development contracts in other special districts, the contracts here involve land-use rights and obligations, not sovereign or police powers that special districts are legally barred from delegating. The contracts establish Disney’s rights concerning use of its own property and, as expressly authorized by [Reedy Creek’s] charter, restrict [the new district] from using its own property for non-public purposes that interfere with Disney’s development of its property,” the document says.
Furthermore, the agreements protect Disney’s right to develop its land and limit the new district’s ability to interfere, which constitute a property right protected against government taking without fair compensation, it continues.
Additionally, the attempted abrogation of the agreements was “not enacted for any legitimate state interest. It was instead enacted to further an official state campaign of retaliation against Disney for expressing a viewpoint that Gov. DeSantis and his legislative allies disagree with.”
Chilling effect
The campaign “has chilled and continues to chill Disney’s protected speech,” the brief says, specifically its right to petition the government.
“The retaliatory reconstitution of Disney’s governing body’s structure … have chilled and continue to chill Disney’s protected speech. This unconstitutional chilling effect is particularly offensive due to the clear retaliatory and punitive intent that motivated the governor’s and the Legislature’s actions.”
Disney’s legal team includes Daniel Petrocelli, The American Lawyer’s litigator of the year for 2020. He is chair of the trial practice at O’Melveny & Myers and represented the father of Ronald Goldman in a successful civil suit against O.J. Simpson and Disney in asserting it rights to the Winnie the Pooh franchise. Also notable, he defeated the U.S. Department of Justice’s challenge to the $85 billion AT&T-Time Warner merger in 2018.
Also on the team is Alan Shoenfeld of the New York powerhouse firm Wilmer Cutler Pickering Hale and Dorr.
“Disney finds itself in this regrettable position because it expressed a viewpoint the governor and his allies did not like,” the brief notes.
“Disney wishes that things could have been resolved a different way. But Disney also knows that it is fortunate to have the resources to take a stand against the state’s retaliation — a stand smaller businesses and individuals might not be able to take when the state comes after them for expressing their own views. In America, the government cannot punish you for speaking your mind.”
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