Decoding the Accusations in Disney’s Lawsuit Against Ron DeSantis

Let’s face it — at this point, the drama between Florida Governor Ron DeSantis and Disney has been going on for so long and has had so many twists and turns, it can be hard to remember how it started, what’s happening now, and why it all matters. Don’t worry, we’re here to help.

By now you may have heard about Disney’s lawsuit against DeSantis, DeSantis’ response, and the latest actions by the Board of Supervisors for the Central Florida Tourism Oversight District (what used to be called the Reedy Creek Improvement District) but what does it all really mean? Why should YOU care? Let’s break it all down.

How This All Started

Before we dive into the current updates, let’s go through a bit of background (rapid-fire-style):

• In 2022, Disney issues a statement against Florida’s controversial Parental Rights in Education law (what critics called “Don’t Say Gay”) — Disney indicated that the law should not have been passed and that their goal would be for the law to be struck down or repealed.
• Governor DeSantis responds to Disney’s statement and indicates that they “crossed the line.”
• The actions against Disney begin.
• First, a bill was introduced and swiftly passed that would dissolve the Reedy Creek District in 2023.

• Eventually, plans change and the Florida government doesn’t officially dissolve the District. Instead, the District survives but it is renamed and a bill is swiftly passed that makes substantial changes to the District — a new board appointed by the governor (not voted in by the landowners, a.k.a. Disney) is put in place, as are other restrictions and requirements.
• The new board meets and teases potential future changes in the District (including COVID-19 policy changes, the potential dissolution of the 2 cities in the District, and more).
• According to the board, they initially met with a Disney Vice President about their relationship and thought things were heading in the right direction.

• According to the board, only weeks later they discover 2 key agreements entered into by Disney and the prior board (a Development Agreement and Restrictive Covenants) that reportedly “strip” the new board of much of their power.
• The new board launches a campaign against Disney regarding those agreements.
• Disney defends the agreements as having been properly noticed and agreed to before the new board arrived.
• DeSantis and others weigh in, indicating that they will be battling to declare these agreements null and void. DeSantis outlines a plan of attack against Disney including legislative action and actions by the board regarding these agreements.

• DeSantis also makes a number of threats about future actions that would impact Disney, like building a prison near Disney World or subjecting Disney World rides and the monorail to state inspection.
• That leads us to the most recent actions.

Actions by the District’s Board of Supervisors

First, let’s tackle what the District’s new Board of Supervisors (all appointed by DeSantis) has done lately. The key thing they did on April 26th, 2023 is essentially declare the Development Agreement and Restrictive Covenants Disney and the prior board had entered into as VOID.

They had heard arguments during a previous meeting about potential legal issues with the agreements, got some “legislative findings” prepared by their legal advisors, and heard more arguments during the April 26th meeting. Then, they ultimately decided to adopt the legislative findings, which included statements declaring the agreements as void.

Why does the new board feel that these agreements are void? Well, there are a lot of reasons (some of which go deep into legal arguments about notice, etc. that you may not care about), but here are some basics. The board and/or its legal counsel have argued that:

• Disney didn’t properly notify other property owners in the District of the Development Agreement
• The agreements were invalid because they gave government powers to a private company
• There were reportedly some issues with some exhibits that were not properly attached in some places
• The District didn’t have the proper rules in place to adopt the Development Agreement
• The cities of Lake Buena Vista and Bay Lake didn’t conduct public hearings or approve the Development Agreement
• There were issues with the adoption of the Comprehensive Plan amendments, based on which the Development Agreement was adopted
• The Agreements “contravene the Legislature’s intent”
• The Development Agreement is unconscionable
• There are issues with consideration
• They violate the Florida constitution

As noted above, the board isn’t just taking issue with the Development Agreement and Restrictive Covenants, they’ve also taken issue with some Comprehensive Plan Amendments and land development regulation amendments passed by the District and/or the cities of Bay Lake and Lake Buena Vista.

The comprehensive plan lays out some maximum levels of development Disney can do within the District in the future when it comes to new hotels, new theme parks, etc. The 2032 Comprehensive Plan was adopted by the District in May of 2022 and Disney has pointed out that it was actually approved by state officials in the summer of 2022 (NPR).

Legal counsel to the board has raised issues with how these were adopted (particularly the fact that the purpose of the comprehensive plan amendments changed from when they were first discussed in 2017 to their passage in 2022). The board’s legislative findings address potential legal issues with the 2032 Comprehensive Plan and those development regulations.

Since the board has adopted the legislative findings, it seems they’ve agreed that there are potential issues there. But one board member seemed to indicate that this will be more fully addressed in the future so it can be clarified what comprehensive plan is now actually in effect.

If the 2032 one is “thrown out,” it seems the 2020 one could come back into effect.

During their April 26th, 2023 meeting, the board did 2 other key things. First, it officially voted to give itself “superior authority” within the District regarding certain zoning and planning decisions.

• Per this resolution, the cities can’t adopt any land development regulations that are in conflict with or less stringent than those adopted by the board.
• They did away with the separate Planning Board and gave that power to the Board of Supervisors. The board now serves as the “final decision-making authority for the District and no further administrative appeal is available” at least on those planning matters.

In addition, the Board held its first hearing and made its initial approval on a resolution about COVID-19 restrictions.

• In terms of the District itself, the District’s employees, and the buildings “of the District,” employees and other persons cannot be required to wear a mask. 
• For structures in which private businesses operate in the District, however, the resolution just notes that such businesses shall not require customers to provide documents certifying COVID-19 vaccinations or a post-infection recovery. Plus, those businesses cannot impose a COVID-19 testing mandate for access to the business’ buildings.

Disney vs. DeSantis Federal Lawsuit

The drama doesn’t stop there. Following the board’s latest meeting on April 26th, 2023, Disney filed a federal lawsuit against DeSantis and the members of the District’s new Board of Supervisors.

At its core, Disney argues that the Governor has unlawfully retaliated against Disney because of the statements Disney made against the Don’t Say Gay law. Essentially, the lawsuit alleges that all of the actions taken against Disney — from the bill that first said it would dissolve the District to the latest actions by the board in declaring the Development Agreement void — have been part of DeSantis’ “relentless campaign to weaponize government power” against Disney.

Here are some of the key things Disney has alleged in the complaint:

• Disney has made an immeasurable impact on Florida and its economy, establishing Central Florida as a top global tourist destination.
• Disney is one of Central Florida’s largest taxpayers. (Taxes have been a point of contention since DeSantis and the board have argued that Disney is not paying its fair share of taxes or trying to avoid paying certain taxes.)
• Disney is also one of the largest employers in the State.
• DeSantis has orchestrated a “targeted campaign of government retaliation” as “punishment for Disney’s protected speech,” and that “now threatens Disney’s business operations.”

• Disney expressed its opinion on state legislation and was then punished by the State for doing so.
• Disney had “no choice but to file this lawsuit to protect its cast members, guests, and local development partners.”
• Disney’s Development Agreement with the prior board does not “undermine” the authority of the new board to “govern and exercise authority.”
• The Development Agreement was “discussed and approved after open, noticed public forums in compliance with Florida law.”
• Disney claims it has been forced to “defend itself against a State weaponizing its power to inflict political punishment.”

So what is Disney asking the court to do? Well, Disney wants the court to:

• Declare the legislative findings that were recently approved by the new board to be unlawful (these are the ones that declared Disney’s Development Agreement and Restrictive Covenants void)
• Declare that the agreements Disney signed with the old board are still in effect, and
• Declare that the laws impacting Reedy Creek (specifically, the first one that would have dissolved the district, and the second one that made substantial changes to the District) are unlawful.

Basically, it would be as if a hard reset button were hit. If the laws that impacted Reedy Creek were unlawful forms of retaliation, the new board may no longer be in play and Disney could be back in control of its own District. This lawsuit is still pending and, we expect, could take a long time to be fully resolved.

A spokesperson of DeSantis has responded to this lawsuit saying “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.”

DeSantis himself has since spoken on the matter, per NBC News, and said “I don’t think the suit has merit, I think it’s political…I think they filed in Tallahassee for a reason, because they’re trying to generate some district court decision. But we’re very confident on the law.”

DeSantis went on to say, “They don’t want to have to pay the same taxes as everybody else…And they want to be able to control things without proper oversight.”

Disney Expands the Lawsuit

On May 8th, according to The Orlando Sentinel, Disney expanded the lawsuit against DeSantis and the new Board targeting two bills passed by the Florida Legislature.

In the amended lawsuit, Disney’s lawyers said the Monorail and developments agreements offer more evidence of the “targeted campaign of government retaliation” by DeSantis and his allies.

It also uses DeSantis’ words to support their lawsuit — DeSantis said “[T]his all started, of course, with our parents’ rights bill,” which Disney now notes in the amendment.

The amended lawsuit asks courts to invalidate the DeSantis-signed bill that would void Disney’s development agreements with the Reedy Creek Improvement District.

Florida Legislation

But wait…there’s more. DeSantis anticipated that an action by the board declaring Disney’s agreements with the old board could spark legislation. That’s part of the reason why he revealed that some actions would also be taken in the legislature.

The key thing here is Senate Bill 1604. Senate Bill 1604 (Land Use and Development Regulations) was initially filed in March. The bill primarily deals with certain comprehensive plan requirements. An amendment was proposed to the bill following DeSantis’ press conference about invalidating Disney’s agreements with the prior board.

The amendment prevents independent special districts (like the Central Florida Tourism Oversight District, formerly known as Reedy Creek) from complying with any development agreement if that agreement was entered within 3 months before the effective date of a law that changes how the special district selects its governing body.

It also allows the new governing body of the special district to review any such development agreements within 4 months of taking office. Then, they would vote on if they will readopt the agreement or not. Some of these requirements would expire on July 1st, 2028 unless reenacted.

Senate Bill 1604 (containing this amendment) was passed by the Florida Senate and Florida House of Representatives and officially signed into law by Governor DeSantis in May 2023.

This (now) law will impact Disney because the Development Agreement at issue was approved by the old board on February 8th, 2023. That falls within 3 months of the law that changed how the District’s board of supervisors is selected.

Essentially, this serves as a second way to invalidate Disney’s agreements with the old board. Even if the new board’s legislative declaration that Disney’s older agreements are void is struck down by a court through Disney’s lawsuit, this bill could (unless also struck down) be another way to impact Disney’s agreements and make sure they’re not allowed to stand. It’s possible Disney could amend its federal lawsuit to include allegations related to this bill to rope it into its overall accusations. We’ll be on the lookout for updates.

Board’s Lawsuit Against Disney

The District’s board later scheduled a special meeting for May 1st, 2023. Their only new business was a “Board discussion and direction to litigation counsel and authorization to defend District officials sued in official capacities.”

At that meeting, the Board authorized its counsel to initiate a state court lawsuit against Disney. Martin Garcia, Chairman of the Board, said during the meeting, “Since Disney sued us, we ha[ve] no choice but to respond.”

He said the Board would authorize legal action in response to Disney’s federal lawsuit and said that the District would “seek justice” in state court.

In an event, DeSantis was asked for his reaction to the situation. He responded by saying “No corporation is above the law” and shared, “It’s been very disappointing to watch this particular company, what they’ve done by advocating things like the sexualization of children.”

DeSantis framed this as a question about good governance, and said Disney was “putting their thumb in the eye of the voters of the state.”

See DeSantis’ statement here

That lawsuit by the board against Disney has been filed in the circuit court of the 9th Judicial Circuit for Orange County, Florida. Again, this is a state court case while Disney has filed their lawsuit against DeSantis and the board in federal court.

So what is the Board alleging? Here are the basics:

• They claim Disney had a “fiefdom” under the old Reedy Creek setup where it “wrote the laws that governed itself, chose whether and how to enforce those laws against itself, and set its own tax rate.”
• They claim that “No other Florida business, large or small, enjoyed those benefits.”
• The board acknowledges that “much good came from the special status that the Florida Legislature granted Disney in 1967.”
• But, they allege that things have changed, and “over time Disney used its influence to obtain what must have seemed like permanent exemptions from the democratic checks and balances that apply to all other Florida businesses.”

The new Board claims, “What began as an interesting and innovative experiment in privatization devolved into a depressing example of crony capitalism.”

The new Board also argues:

• Disney “[i]n an effort to stymie Florida’s elected representatives…covertly cobbled together a series of eleventh-hour deals with its soon-to-be-replaced puppet government.”
• The board claims that due to several issues, these agreements Disney entered into are “null and void—not even worth the paper they were printed on.”
• The Complaint sets forth various counts (basically formal claims brought against Disney) including issues with public notice, a violation of certain parts of the Florida Constitution and/or Florida Statutes, and more.

The Board is asking that the state court:

• Declare that the Development Agreement is “void, unenforceable, and/or invalid”
• Declare that the Restrictive Covenants are also “void, unenforceable, and/or invalid”
• Issue an order stopping Disney from enforcing the Development Agreement and the Restrictive Covenants, and
• Grant any other relief the court thinks is proper

We’ll keep checking for updates here.

What People Are Saying

We’ve already talked about DeSantis’ comments on the matter, but he’s not the only one chiming in on the drama. Disney CEO Bob Iger (prior to some of the latest developments) accused DeSantis of retaliating against Disney and said “That just seems really wrong to me.”

Iger emphasized that Disney wants to invest billions of dollars in Disney World, and “any action that thwarts those efforts, simply to retaliate for a position a company took sounds not just anti-business, but it sounds anti-Florida.”

Iger pointed out that he’d be “glad” to meet with DeSantis if DeSantis wanted to meet with him.

Prior to the filing of the Disney lawsuit, various Disney Springs tenants spoke to the new board about their feelings on the whole feud with DeSantis and Disney. Time and time again, the restaurant and store leaders emphasized their concern about what is happening with Reedy Creek.

Many of them talked about the threat of increased taxes (DeSantis has previously threatened to increase hotel taxes and potentially impose tolls on the roads leading to Disney — though he seemed to back off of that idea in a more recent press conference) and how that is concerning.

Steve Lombardo, who is associated with The BOATHOUSE summed it up by saying “Please understand that when you make these decisions, that it impacts far more than just Disney.” Some speakers urged the board, DeSantis, and Disney to meet and find a way to resolve things.

While the board thanked these leaders for their comments, the threat of increased taxes looms ahead. The new board’s chairman (Martin Garcia) emphasized that, in his view, “Disney picked the fight with this board.” He said that because they’ve had to hire lawyers to evaluate Disney’s agreements, that will cost the District money and they’re going to have to raise taxes.

What do legal experts think about the Disney lawsuit — does it have any merit? According to CNN, legal experts they’ve spoken to seem to think Disney “is on firm footing.” One said, “It’s a serious First Amendment case.” Another called it a “powerful complaint” with “extremely strong” arguments.

Ted Boutrous, a First Amendment attorney said “DeSantis has admitted — indeed bragged about — retaliating against Disney to punish it for its speech on an issue of public concern and importance…That is a classic First Amendment violation.”

But experts aren’t the only ones chiming in. In speaking with Squawk Box (CNBC), Kevin McCarthy (Speaker of the United States House of Representatives) suggested that DeSantis and Disney sit down to discuss the issue.

He noted how Disney is a big employer in Florida and that the Governor should sit down with them to solve the problem. But he also seemed to suggest that companies shouldn’t get into politics.

"If you think the only action is to go to court, I believe that's wrong," says @speakermccarthy on $DIS suing @govrondesantis. "But I don't think building a prison next to a place where you bring your families is the best idea…Sit down, find your differences, and solve them." pic.twitter.com/frhubz9ELf

— Squawk Box (@SquawkCNBC) April 27, 2023

Ted Cruz also spoke on the issue and said that this all started when Disney got involved in “woke politics.” When pushed with follow-up questions, Cruz said there’s no doubt Disney has a right to sue DeSantis, but they also face the consequences of their actions.

"Too many companies are getting into politics," says @SenTedCruz. "I'd rather have Disney focus on Mickey Mouse and not be lobbying the legislature…There's no doubt $DIS has a right to [sue @govrondesantis], but they also have to face the consequences." pic.twitter.com/N1eYL0CoDV

— Squawk Box (@SquawkCNBC) April 27, 2023

 

Everything Else You Need to Know

So what else do you need to know? Here’s a quick rundown. First, DeSantis has threatened to make Disney World rides subject to state inspection. Currently, Florida law states that “permanent facilities that employ at least 1,000 full-time employees and that maintain full-time, in house safety inspectors” are exempt from the State-conducted inspections. Thus, Disney (and other major theme parks in Florida) have been exempt from this requirement for a long time.

DeSantis, however, has indicated that he wants to change this. The way he proposed this might be done is through legislation that would impact theme parks within a special district. Disney World, however, is the only major Central Florida theme park that is located in a special district. This means that (if DeSantis’ plan is carried out in that way) other spots like SeaWorld and Universal Orlando would remain exempt from state inspection regulations.

Along with ride inspections, DeSantis has specifically taken issue with the Disney World Monorail and wants this to be subject to state inspection as well. During one press conference, he said, “They exempted the Monorail from any safety standards or inspections…so they’re gonna go and make sure that the monorail is subject to oversight just like everything else would be in the state of Florida.”

It appears DeSantis’ plan here is also to target special districts (which, again, wouldn’t impact other major theme parks in the area — like Universal or SeaWorld). An amendment has been filed to Senate Bill 1250 that would carry out DeSantis’ plan. This bill was later substituted (essentially) with House Bill 1305 (which has an identical amendment related to DeSantis’ plan).

The amendment would require the Department of Transportation to adopt minimum safety standards for a very specific kind of transportation: “any governmentally or privately owned fixed-guideway transportation systems operating in this state which are located within an independent special district created by local act which have boundaries within two contiguous counties.”

It appears that language would apply to the Central Florida Tourism Oversight District and the Disney World monorail (some have also wondered if it would apply to the Skyliner as well). That bill (as amended) has passed the Senate and House of Representatives, and is pending DeSantis’ signature.

The amendment would also require the Department to do safety inspections for fixed-guideway transportation systems that are raised. And inspectors will need to follow safety protocols, including requiring the suspension of system service to ensure the safety of inspectors and the traveling public during those inspections.

According to the Orlando Sentinel, Sen. Nick DiCeglie said that inspections would be scheduled for a time that’s agreeable to both the state and Disney, and “If there are any safety issues, having a complete suspension is really going to be an action of last resort.”

WHEW. Exhausted yet? That’s all we’ve got on this situation for now but we’re sure more drama is ahead. Be sure to check back with us for all the latest.

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