Disney v. DeSantis — Implications and Insights

On April 26, 2023, Disney sued Ron DeSantis, nearly a month after the Florida governor signed legislation that would dissolve the Reedy Creek Improvement District (RCID) and named five appointees to replace the Disney board of directors. On May 1, the DeSantis-appointed board countersued Disney to void any “backroom deals.”

This case will have far-reaching implications on the constitution of government agencies and their control over private entities. While government regulations are meant to protect the people, corporations are allowed certain freedoms to express their opinions and what they deem best for the company and people.

The crux of Disney v. DeSantis is a violation of a corporation’s freedom of speech and the right to address the government for the grievances such a violation may bring.

The relationship between government and corporations

The relationship between government entities and privately-owned corporations is a complex one. Because corporations generate jobs and provide essential goods and services to the public, they are an essential component of the economy; however, governments must simultaneously ensure that corporations operate in a way that still benefits their constituents as a whole.

When government bodies implement and enforce regulations, they do so with the intent of protecting not only corporations, but also those corporations’ employees and consumers, as well as the environment. Yet, government agencies themselves are not exempt from those same regulations and are typically held to an even higher standard than privately-owned companies.

As a government agency, Florida’s state legislature possesses significant authority to regulate businesses operating within its territory. The state legislature is free to change those laws, and to make it easier — or more difficult — for other corporations to do the same thing.

At its core, Disney v. DeSantis is a conflict between the private and public sectors. The state of Florida originally provided Disney with a special taxing entity in 1967, but has since revoked the company’s special tax status for speaking out about the “Don’t Say Gay” bill — a move which Disney claims is government retaliation against a private entity’s right to free speech under the First Amendment. Meanwhile, the state of Florida claims it is protecting its citizens, countering that Disney’s recent action serves only to benefit the company’s bottom line, rather than the people of Florida.

Arguments on both sides

Critics of the bill argue it is an unconstitutional attack on Disney’s First Amendment rights, arguing it is retaliation for Disney’s criticism of DeSantis’s “Don’t Say Gay” law passed in March 2022. The basis of the lawsuit is Disney’s argument saying these changes are retaliation for speaking out against Governor DeSantis, which — if proven to be true during subsequent legal proceedings — would render the bill unconstitutional.

Conversely, supporters of the bill say it is necessary to bring Disney under the state of Florida’s control, arguing Disney has too much power and autonomy as a privately-owned and operated corporation, and that the new district will be more accountable to the people of Florida. They also argue that, as a private company, Disney should not be able to dictate public policy, claiming the company has used its power and influence to lobby for laws that benefit its bottom line, and that the new district will prevent Disney from doing so.

The counter-suit led by the state of Florida is labeled as such because it follows Disney’s initial lawsuit against Governor DeSantis, but it is an argument against the ability of Disney to file suit in the first place. The state of Florida is counter-suing to demand that Disney has no existing expansion contracts.

Essentially, Disney is requesting for the RCID to be reinstated and the expansion contract to be honored. The company is also seeking to set a precedent that will protect the First Amendment rights of corporations.

Broader ramifications of Disney v. DeSantis

Disney’s lawsuit against DeSantis is based on a violation of constitutional rights. For a judge to grant Disney the relief it’s seeking, they must find that Governor DeSantis — in his official capacity — retaliated against Disney for its speech; thereby violating the corporation’s constitutional rights under the First Amendment.

For DeSantis, this could be extremely damaging to his political career and even roadblock his potential efforts to be elected to higher political office. Although DeSantis hasn’t officially announced he is running for office in 2024 at the time of this article being written, there have been speculations.

Another consequence could equate to further legal ramifications for Governor DeSantis. If the court finds he acted illegally in dissolving RCID and/or violating Disney’s First Amendment rights, he could be held personally liable for damages and potentially censured by the Florida Legislature.

In Disney’s favor, should it win the lawsuit, the most immediate ramification is the agreements to expand Walt Disney World Resort will be put back in place. Disney will be able to expand as it originally intended without oversight from the board of directors, as DeSantis could lose the ability to appoint its members.

Additionally, Disney winning the case could set a precedent that corporations have the right to speak out on political issues without fear of government retaliation. This, in turn, could lead to more corporations using their resources to advocate for (or against) broader social issues.

Notably, if Disney wins the case, it may also be seen as a victory for the legislature and the judiciary, and a setback for the executive branch, leading to a more balanced government. The separation of power is a fundamental principle of the American government designed to prevent any one branch of government from becoming too powerful.

Indeed, the Disney V. DeSantis case could set the standard for future government agencies and corporations, and the First Amendment rights of private entities. While Disney may desire a quick resolution, this may not be in the cards for the Mouse and his Magic Kingdom. Disney v. DeSantis is now in the federal judiciary system, meaning that — depending on the issues and circumstances — the case could conceivably escalate to the United States Supreme Court.

Regardless of this case’s eventual outcome, its proceedings are currently being (and will continue to be) closely watched by businesses and organizations across the country and beyond.

— Omar Ochoa, the founder of Omar Ochoa Law Firm, is a distinguished attorney who has received recognition for his work. He currently serves as the city attorney of Edinburg, TX. His areas of legal expertise span a diverse range, including antitrust, class actions, insurance, commercial litigation, government issues, securities, oil and gas, trade secrets, construction law, environmental law, qui tam, the Fair Credit Reporting Act, employment matters, private equity transactions, immigration, and breaches of contract. To contact, please email oochoa@omarochoalaw.com.