There are probably very few people who are unfamiliar with Disney’s feud against Florida Governor Ron DeSantis at this point. The company has been at odds with the Governor since his controversial parental Rights in Education Act was signed into law which prevents teachers from discussing gender and sexual orientation with children younger than 3rd grade.
Disney was initially silent on the topic, but after pressure from Cast Members came out with a strong stance against the bill, even going so far as to vow to work to overturn the law. This prompted Governor DeSantis to sign legislation eliminating the Reedy Creek Improvement District, a special-municipal district Disney has operated in the state since the late 1960s.
Recently a Disney investor, Kenneth Simeone, sued the company over their actions claiming that “[The] Walt Disney Co. created “far-reaching” financial risks for itself by opposing a Florida law.” The lawsuit, filed in Simeone’s home state of Delaware, seeks to have records and internal documents related to the company’s decision released publicly. According to a report from Bloomberg, this type of “books and records” suit is often granted by Delaware judges. The purpose of the lawsuit is to obtain records and documents that can be used to sue Disney’s directors over their public opposition to the law.
Simeone argues that Disney officials ignored a warning from the governor about opposing the statute and that the decisions of Disney’s directors calls into question their ability to lead, given that they ignored counsel that opposing the law could result in “loss of the benefits of a one-of-a-kind deal that has existed between Disney and the state for more than half a century.”
The 22-page lawsuit also states that “The financial repercussions from Disney’s actions, and resulting harm to the company and its stockholders, have been swift and severe.” Simeone contends that Disney’s opposition to the so-called “Don’t Say Gay” bill played a significant part in Disney’s record losses Disney’s record losses this year. Stock shares have fallen 43% in 2022, which is a drastic downward turn considering most stocks fell just 10% this year.
The “books and records demand” is just the first step in the investor’s plan to sue the company’s leadership over the losses. No judgment will come down on Disney as a result. They’ll only be legally bound to turn over any documents related to their decision to oppose the law. From there, Simeone and other investors could seek more punitive legal action if records show grounds for such a lawsuit.