Disney Sues DeSantis Over Control of Its Florida Resort

 

Disney Sues DeSantis Over Control of Its Florida Resort

 

The company claimed “a targeted campaign of government retaliation,” which it said stemmed from its criticism of a contentious state education law.

 

Brooks Barnes

By Brooks Barnes

April 26, 2023

https://www.nytimes.com/2023/04/26/business/disney-desantis-board-florida.html

 

Last year, under pressure from its employees, Disney criticized a Florida education law prohibiting classroom discussion of sexual orientation and gender identity for young students. Almost instantly, Gov. Ron DeSantis of Florida started calling the company “Woke Disney” and vowing to show it who was boss.

 

“If Disney wants to pick a fight, they chose the wrong guy,” Mr. DeSantis wrote in a fund-raising email at the time.

 

Since then, Florida legislators, at the urging of Mr. DeSantis, have targeted Disney — the state’s largest taxpayer — with a variety of hostile measures. In February, they ended Disney’s long-held ability to self-govern its 25,000-acre resort as if it were a county. Last week, Mr. DeSantis announced plans to subject Disney to new ride inspection regulations.

 

Disney has quietly maneuvered to protect itself, enraging the governor and his allies. On Wednesday, however, the company decided enough was enough: Disney filed a First Amendment lawsuit against Mr. DeSantis and a five-member board that oversees government services at Disney World in federal court, claiming “a targeted campaign of government retaliation.”

 

“In America, the government cannot punish you for speaking your mind,” Disney said in its complaint, which was filed in U.S. District Court for the Northern District of Florida. Disney had criticized the Parental Rights in Education law, which opponents labeled “Don’t Say Gay” and which prohibits classroom discussion of sexual orientation and gender identity for students through the third grade. The DeSantis administration recently expanded the ban through Grade 12.

 

The lawsuit accused Mr. DeSantis of a “relentless campaign to weaponize government power against Disney in retaliation for expressing a political viewpoint.” The campaign, the complaint added, “now threatens Disney’s business operations, jeopardizes its economic future in the region and violates its constitutional rights.”

 

Taryn Fenske, a spokeswoman for Mr. DeSantis, called the lawsuit “yet another unfortunate example of their hope to undermine the will of the Florida voters and operate outside the bounds of the law.” She added, “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.”

 

Just a short time ago, it would have been unthinkable for Disney and Florida to be such bitter adversaries. Since 1967, when the state’s Republican leaders gave Disney the right to self-govern property as an incentive to build a theme park, the company and Florida governors have, for the most part, gotten along splendidly. Disney has always doled out hefty political contributions. But its real influence came in the form of jobs and economic impact: Disney World is the nation’s largest single-site employer — roughly 75,000 employees work there — and attracts 50 million guests annually, powering Florida’s all-important tourism economy.

 

Disney paid and collected a total of $1.2 billion in state and local taxes in 2022, according to company disclosures. The company recently said it had earmarked $17 billion for expansion spending at the resort over the next decade, growth that would create an additional 13,000 jobs at the company.

 

The conflict between Mr. DeSantis and Disney has become a national spectacle, in part because he is a leading Republican presidential contender (although he has not officially declared a bid). He has drawn criticism from potential presidential rivals for his relentlessness against Disney. “This is all so unnecessary, a political STUNT,” former President Donald J. Trump wrote last week on Truth Social, his social media site.

 

Daniel M. Petrocelli, a high-powered Los Angeles litigator, filed the lawsuit in Tallahassee on Disney’s behalf. Mr. Petrocelli was the lawyer Mr. Trump turned to in 2016 when dealing with a class-action fraud case against the defunct Trump University.

 

Disney’s case was assigned to Mark E. Walker, chief judge for the Northern District of Florida. Judge Walker, known for stinging rulings and appointed by President Barack Obama, has experience with First Amendment cases. Last year, he handed a victory to University of Florida professors, saying they could not be barred from providing expert testimony in lawsuits against the state.

 

“Disney regrets that it has come to this,” the complaint said. “The company sought to de-escalate the matter for nearly a year, trying several times to spark a productive dialogue with the DeSantis administration. But having exhausted efforts to seek a resolution, the company is left with no choice.”

 

Disney filed its complaint minutes after a board appointed by Mr. DeSantis to oversee Disney World nullified two agreements that gave Disney vast control over expansion at the resort complex. The appointees voided the agreements after the board’s general counsel, Daniel Langley, presented evidence of what he called “self-dealing” and “procedural unconscionability” by Disney in pushing them through this year. Mr. Langley said Disney had violated Florida law in multiple ways, including by failing to fully notify the public of the actions it took.

 

One of the agreements gives Disney the ability to build 14,000 additional hotel rooms, a fifth theme park and three smaller parks. The other restricts the use of abutting land; no strip clubs, for instance. (Disney World already has four theme parks, two water parks, 18 Disney-owned hotels, a shopping mall and a 220-acre sports complex.)

 

Disney’s lawsuit called the board’s action “patently retaliatory, patently anti-business and patently unconstitutional.” Disney has repeatedly described the agreements as “appropriate” and struck in public meetings advertised in The Orlando Sentinel.

 

At the center of the fight between Mr. DeSantis and Disney is a 56-year-old special tax district that encompasses Disney World. The district effectively turned the property into its own county, giving Disney unusual control over fire protection, policing, waste management, energy generation, road maintenance, bond issuance and development planning.

 

Florida has hundreds of similar special tax districts. One covers The Villages, a colossal senior-living community northwest of Orlando. Another covers Daytona International Speedway and the surrounding area.

 

In February, lawmakers decided to allow the governor to appoint an oversight board for the Disney district in an attempt to curtail the company’s autonomy. When the appointees reported for duty, however, they discovered that the previous, Disney-controlled board had approved the development agreement and restrictive covenants, limiting the new board’s power for decades to come.

 

They were enraged, as was Mr. DeSantis. He responded by suggesting a variety of potential punitive actions against Disney, including reappraising the value of the resort for property tax levies, imposing tolls on roads that lead to Disney World and developing land near the entrances to the resort.

 

“Maybe create a state park, maybe try to do more amusement parks — someone even said, like, maybe you need another state prison,” he said at an April 17 news conference.

 

He has also asked Florida’s chief inspector general to investigate Disney’s efforts to circumvent his authority.

 

Mr. DeSantis and his allies have repeatedly characterized their actions as simply putting Disney on “level playing ground” with other theme park operators in the state. But Universal Orlando, SeaWorld, Busch Gardens and Legoland do not have oversight boards controlled by the governor. Based on the governor’s comments, the state’s other large theme parks would not be subject to additional ride safety inspections — only Disney World.

 

Robert A. Iger, Disney’s chief executive, has called Mr. DeSantis “anti-business” and “anti-Florida” for his actions. Mr. Iger has also signaled that future investment in Disney World could be at risk if the governor continued to use Disney as a political punching bag.

 

“A company has a right to freedom of speech just like individuals do,” Mr. Iger said at Disney’s annual shareholder meeting this month. “The governor got very angry over the position Disney took and seems like he’s decided to retaliate against us, including the naming of a new board to oversee the property, in effect to seek to punish a company for its exercise of a constitutional right. And that just seems really wrong to me.”

 

Brooks Barnes

Brooks Barnes is a media and entertainment reporter, covering all things Hollywood. He joined The Times in 2007 as a business reporter focused primarily on the Walt Disney Company. He previously worked for The Wall Street Journal. More about Brooks Barnes