Last year, I criticized the lawsuit of Disney against Florida after losing its special status in the former Reedy Creek Improvement District. U.S. District Judge Allen Winsor in Tallahassee appears to view the matter as dimly as I did. He just dismissed the action in a major loss for the House of Mouse.
Disney decided to go public with a campaign against the popular parent rights legislation for Florida schools. Florida responded by removing the special status long enjoyed by the company. There is another lawsuit pending in state court.
Judge Winsor found that Disney lacked standing to sue DeSantis, the secretary of the Florida Department of Economic Opportunity and the new governing district. The separate lawsuit is still pending in state court in Orlando.
The court found that the law was constitutional on its face. As a result, it found no standing to challenge the law under the First Amendment. As I noted earlier, Disney was effectively saying that a state legislature could not remove special status and create greater uniformity with all companies under this law. Even if there were retaliatory purposes, there was clearly a public policy reason for seeking such uniformity. If the courts were to block it, it would invite a major intrusion of the courts into decisions on the priorities of legislatures. As the court noted, Disney is “not the district’s only landowner, and other landowners within the district are affected by the same laws.”
Disney seems to be doubling down and said it would “press forward with our case.” It insisted that “this is an important case with serious implications for the rule of law, and it will not end here.” So once again, what does the company hope to achieve? Is a court truly going to order Florida to maintain special status ad infinitum?
Judge Winsor noted:
“It is true that the laws did not affect all districts, and it is true (at least accepting Disney’s allegations) that Disney faces the brunt of the harm. But Disney offers no support for its argument that the court is to undertake line drawing to determine just how many others a law must cover to avoid ‘singling out’ those they affect most. Here, it is enough to say—as in Hobart—that the law ‘challenged in this case is not pinpointed against a named individual or group; it is general in its wording and impact.””
Disney’s lawyers seem to be pushing a legal claim with the same logic of many of the company’s new movies: waiting for the audience to change its mind rather than changing its strategy.
We have been discussing the shareholder revolt in some companies over social and political agendas that are suppressing profits at companies like Disney and BudLight. Recently, Disney admitted that it was driving away consumers with its controversial positions and Disney CEO Bob Iger has indicated that he wants to return to selling products and not social reforms. With Disney films cratering and the company losing its position as the top grossing film company, shareholders are threatening to take action.
The problem for Iger is turning a massive company around after years of reinforcing this role as a corporate culture warrior, including layers of hires over the years reinforcing this culture. It also needs to address damaging public comments from Disney figures.
Disney recently seemed to acknowledge that it is facing its own Bud Light moment. In its annual SEC report, Disney acknowledges that “we face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products.” In an implied nod to Smith, the company observes that “the success of our businesses depends on our ability to consistently create compelling content,” and that “generally, our revenues and profitability are adversely impacted when our entertainment offerings and products, as well as our methods to make our offerings and products available to consumers, do not achieve sufficient consumer acceptance. Further, consumers’ perceptions of our position on matters of public interest, including our efforts to achieve certain of our environmental and social goals, often differ widely and present risks to our reputation and brands.”
Yet, the company is continuing to litigate against a popular parental rights law to demand a special status denied to other companies. That is unlikely to play any better in court than many of these films have played in theaters. What is not clear is whether shareholders support this ill-conceived legal effort. This week, Disney is hardly the happiest place on Earth but it certainly seems like the most litigious.
Here is the decision: Disney Dismissal-Order