Schemes and Lies: Disney Caught Up in Massive Class-Action Lawsuit Scandal

Disney sued

Disney is in hot water as lies purported by former CEO Bob Chapek have resulted in a class-action lawsuit against the Walt Disney Company.

In a suit filed on May 12, 2023, Chapek is personally named among the defendants alongside the company as a whole as a result of misleading streaming revenue reports released while Chapek was still at the helm of the entertainment giant.

Related: New Evidence Suggests the Chapek-Era Was Always Designed to Fail 

The complaint was filed in the U.S. District Court for the Central District of California by a pension fund. Court records state that Disney “repeatedly misled investors about the success of the Disney+ platform by concealing the true costs of the platform, concealing the expense and difficulty of maintaining robust Disney+ subscriber growth, and claiming that the platform was on track to achieve profitability by 2024.”

Related: Chapek Was Reportedly Cooking the Books With Disney+

Disney sued

Credit: Disney

What Disney Allegedly Did Wrong

This deception came to light shortly before Chapek was fired in November 2022 and played a significant role in his demise. Antitrust and securities fraud accusations tend to have that effect. When he first became Disney’s CEO, one of Chapek’s initial decisions was to see the company undergo a restructuring that moved around various assets and intellectual properties. This allowed Disney to play a shell game with what program went where, making it easier for the company to hide losses and move production costs from Disney+, making the streaming platform seem more profitable than it actually was. 

According to Bloomberg Law, “Chapek’s reorganization represented a dramatic departure from Disney’s historical reporting structure and caused controversy within the company because it redirected power and control from creative content executives to Chapek’s lieutenant Kareem Daniel. Daniel is among the defendants.” 

Related: Disney Gives Chapek Sidekick Kareem Daniel the Boot

Bob Chapek Disney Stock Disney sued

Disney stock plummeted to an all-time low after it came to light that the company was using misinformation rather than actual facts and figures in its earnings reports.

The class-action lawsuit was filed by the Local 272 Labor-Management Pension Fund–a fund with hundreds or thousands of members, according to estimates within the complaint. The pension fund hopes to recoup losses and seeks “damages and injunctive relief” on its allegations of securities fraud. 

A representative for Disney has publicly responded to the lawsuit stating, “We are aware of the complaint and intend to defend vigorously against it in court.”

About Jill Bivins

Jill Bivins has been visiting Disney Parks since she was 2 years old and loves sharing her Disney adventures with the world. She likes to say Disney is in her blood and writing is in her bones — so any time she has the opportunity to combine these loves she is one happy camper! She has a deep abiding love for Epcot and as a die hard Star Wars fan has a serious love for Hollywood Studios as well. When she isn't exploring or writing about Disney Parks, Jill is homeschooling her 8 year old son, playing with her brand new baby son, or pretending to be a farmer on her family homestead (despite being unable to keep even a cactus alive). Find Jill on Instagram @minnieonmain.