In the midst of an ongoing conflict that has captured media attention, Disney (NYSE: DIS) has initiated a countersuit against the Central Florida Tourism Oversight District led by Florida Republican Governor Ron DeSantis. This recent development marks another chapter in the ongoing legal saga between the entertainment powerhouse and the state government.
Disney’s countersuit, distinct from its federal case against DeSantis launched earlier this year, was formally filed on Thursday in Florida’s Ninth Judicial Circuit Court in Orange County. This court is where the Oversight District initially brought its case against Disney back in May.
In response to the Oversight Board’s lawsuit, Disney has filed both an answer and nine new counterclaims. These counterclaims allege that the board has breached two contracts related to the development and management of a 25,000-acre property, formerly known as the Reedy Creek Improvement District (RCID).
The Reedy Creek Improvement District has historically granted Disney a unique level of self-governance, allowing the company to manage its operations independently. This arrangement involves Disney paying property taxes directly to Reedy Creek, which subsequently funds the company’s theme park initiatives and infrastructure upkeep.
Consequently, Disney has enjoyed autonomy in controlling utilities and infrastructure, setting building codes, maintaining internal police and fire departments, and undertaking expansion projects without external government interference.
The crux of the issue began when DeSantis replaced the RCID board members hand-picked by Disney and later retroactively invalidated the contracts. Disney’s current legal action seeks unspecified monetary damages exceeding $50,000, as well as an order from the presiding judge to compel the new district board to fulfill its obligations as stipulated in the agreements.
In a bid for “specific performance,” Disney argues that the District’s breach of the contracts leaves the company without adequate legal recourse. Additionally, Disney contends that the District’s actions encroach on the company’s constitutionally protected free speech rights under Florida’s state constitution.
The countersuit follows recent remarks by DeSantis, who expressed a desire to put an end to the longstanding feud with Disney. DeSantis, currently seeking the Republican nomination for president, indicated that he is open to moving forward, but underscores the importance of treating all businesses equitably.
“We’ve basically moved on. They’re suing the state of Florida. They’re going to lose that lawsuit,” DeSantis said in an interview with CNBC on Monday. “So what I would say is, drop the lawsuit.”
The protracted legal battle stems from Disney’s perception of targeted political reprisal related to the company’s stance on the “Don’t Say Gay” law, known as the Parental Rights in Education Act. This legislation prohibits discussions of sexual orientation and gender identity in early education.
The dispute gained traction in 2022 when then-Disney CEO Bob Chapek criticized the law during the company’s annual shareholder meeting. In response, DeSantis signed a bill into law, enabling him to assume control over Disney’s long-standing special tax district.
In the lead-up to the countersuit, Florida’s attorney general moved to dismiss a lawsuit filed by Disney in April. The motion cited immunity for DeSantis and other officials. The lawsuit claimed that the state had engaged in targeted government retaliation by revoking Disney’s self-governing authority, which it had held for over five decades.
Despite Disney’s request to dismiss the state’s case against it being denied by Florida Circuit Court Judge Margaret Schreiber, DeSantis emphasized the state’s business-friendly environment during an interview. He highlighted how Florida’s economy remained resilient during the pandemic and offered a level playing field for all businesses, including competitors like Universal and SeaWorld.
Information for this story was found via Yahoo Finance and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
