July 11 is a vitally important day in a suit brought against Disney, as it’s the last day for participants in the class-action lawsuit to formally express their desire to be appointed a lead plaintiff by the Court.
A class-action suit, which alleges that executives at Disney misled shareholders with regard to the performance and profitability of the Disney+ streaming platform, has been filed on behalf of shareholders. The complaint further alleges that in doing so, Disney violated federal securities laws, and as a result, shareholders are due restitution.
The massive class-action complaint, which alleges that Disney execs engaged in unlawful business practices, could be the reason that Disney’s CFO Christine McCarthy suddenly announced her departure in June. McCarthy, as well as former Disney CEO Bob Chapek and Kareem Daniel, Disney’s Media and Entertainment Distribution Chairman, are named for their alleged involvement in “drafting, producing, reviewing and/or disseminating false and misleading statements” regarding the success of the company’s streaming business, according to the 39-page document filed in the U.S. District Court for the Central District of California on May 12, 2023.
Chapek was removed from his post as CEO in November 2022, and Daniel’s removal came only days later.
The complaint alleges that executives within The Walt Disney Company misled shareholders on key points about the company’s streaming platform, Disney+, and failed to disclose the following:
- That Disney+ was suffering decelerating subscriber growth, losses, and cost overruns
- That the true costs incurred in connection with Disney+ had been concealed by Disney executives by debuting certain content intended for Disney+ initially on Disney’s legacy distribution channels and then making the shows available on Disney+ thereafter in order to improperly shift costs out of the Disney+ segment
- That Disney Media and Entertainment Distribution made platform distribution decisions based not on consumer preference, consumer behavior, or the desire to maximize the size of the audience for the content as represented but on the desire to hide the full costs of building Disney+’s content library
- That the Company was not on track to achieve its 2024 Disney+ paid global subscriber and profitability targets, that such targets were not achievable, and that such estimates lacked a reasonable basis in fact
The complaint further alleges that the failure on Disney’s part to disclose such information means that Disney had materially misrepresented the actual performance of Disney+, the sustainability of Disney+’s historical growth trends, the profitability of Disney+, and the likelihood that Disney could achieve its 2024 Disney+ subscriber and profitability targets.
The suit reached a milestone on Tuesday, as July 11, 2023, marks the final day for participants in the suit to formally express their desire to be appointed a lead plaintiff by the Court by filing a motion with the Court.
The Weisberg Cummings law firm explains a lead plaintiff as “the class representative or the named plaintiff, [who] represents everyone in a class-action lawsuit who has suffered similar physical or financial injuries. There can be more than one lead plaintiff. Once you have hired an attorney to act as the class action lawyer, you should discuss with them whether you should be the lead plaintiff. Additionally, the site states that lead plaintiffs in class-action suits are tasked with duties that other participants in the case don’t have, such as providing attorneys with evidence, working with attorneys, and sometimes being deposed or called upon to give testimony in court.
There can be more than one lead plaintiff in a class-action case, and often, the lead plaintiff enjoys a larger share of the final settlement amount in the case.
Participants who are interested in leading the litigation on behalf of the class of participants in the case are required to file a motion to be appointed as a lead plaintiff. Further, the motion must be filed within 60 days of the filing of the notice announcing that a suit has been filed. Today, July 11, 2023, marks the last day such a motion can be filed for anyone interested in the role.
More information about filing the motion and the shareholders’ class-action suit against Disney can be found here.