The DeSantis side of this dispute, through the CFTOD Board, recently filed its lawsuit against Disney. This post will recap how we got here and will review the claims of each. It is important to understand the context in discussing the CFTOD’s separate lawsuit.
So in this post, I will review:
- A recap: How DeSantis Took Over the Disney World Special District
- What Disney is Asking the Federal Court to Do.
- What DeSantis is Asking the State Court to Do.
I will then give some of my thoughts on the situation.
Recap: How DeSantis Took Over the Disney World Special District
In my last post, I discussed the background of Disney’s case against DeSantis in some detail. But I’ll give you a brief overview here.
This case is a dispute over control of a Special District (what I am calling a mega-HOA Board) that oversees the development and management of the geographic area in which Disney World sits. Since 1967, Disney hand-selected the board and thus exercised virtually complete control over the development and management of the area.
This was not a problem…until Disney made a statement opposing the “Don’t Say Gay” law.
Once Disney did that, Governor DeSantis put Disney on his naughty list. He determined that it was time to get rid of the Reedy Creek arrangement.
To do this, DeSantis executed a hostile takeover of the Board in three steps.
Step 1: Senate Bill 4C (SB4C)
DeSantis noticed that the Florida Constitution was amended one year after the 1967 Disney World special district was created. The amended constitution states that private corporations should not be given special laws. He, therefore, asked the Legislature to consider whether Disney’s special district was unconstitutional.
In response, the Legislature passed SB4C, which scheduled any special districts created before the Florida Constitution’s amendment to automatically dissolve unless they are reestablished or reaffirmed by a certain deadline.
Step 2: House Bill 9B (HB9B)
Rather than allow the special district to dissolve, in HB9B, the Florida Legislature reconstituted the HOA arrangement by stripping Disney of its power to select Board members. Instead, DeSantis would appoint members.
This would take control away from Disney and put it in DeSantis’ hands.
Step 3: DeSantis appoints the Board
DeSantis then appointed 5 individuals to the new Board. He changed the name of the district from the “Reedy Creek Improvement District” to the “Central Florida Tourism Oversight District.” The CFTOD is the board that now sits over the District.
Related: (YouTube) Who is the CFTOD Board?
Disney Attempts to Keep Control with New Contracts.
Before the new Board took over, Disney and the old Board entered into land development contracts that lock in Disney’s development and management plans for the next 30 years. This would include plans to invest over $17 billion and create 30,000 jobs in Florida over the next 10 years.
Disney refers to these as the “Contracts.”
This would mean that DeSantis’ incoming Board would be contractually bound to honor those contracts and couldn’t muck things up.
But it would also mean that Disney keeps control.
DeSantis Counters.
DeSantis would not have his hands tied. The new Board declared the land use contracts void–meaning they weren’t going to honor them. (The Legislature later ratified the voiding of the contracts in Senate Bill 1604.1) Meanwhile, DeSantis called for an investigation of Disney and the old Board and ordered his chief inspector general to go fishing for any civil and criminal misconduct.
Disney and DeSantis Go to Court
Once DeSantis announced that the Contracts were void and began tacitly threatening Disney with criminal charges, Disney filed its lawsuit to seek relief from what it viewed as DeSantis using his political powers to retaliate against Disney for speaking out against the “Don’t Say Gay” law.
The Board responded by filing its competing lawsuit.
This post will cover what each side is asking for in their respective lawsuits.
What Disney is Asking the Federal Court to Do.
Disney is asking the federal court to rule that DeSantis’ decision to void the contracts was wrongful and that all of DeSantis’ actions towards it have been unconstitutional. This includes not only the decision to void the Contracts but the passing of SB4C and HB9B.
To get to either of these results, Disney is asserting five causes of action, all based on alleged violations of the U.S. Constitution.
Four of Disney’s Claims Rely on the Validity of the Land Use Contracts.
The first four causes of action Disney alleges all require the Land Use Contracts to be otherwise valid.
Here is a summary of these causes of action.
Count One: Contracts Clause Violation
The US Constitution gives people the freedom to enter into private contracts. The government can’t just bail on its contracts or pass laws that impair contracts at its whim and fancy. Disney argues that DeSantis can’t just pass a bill to get out of valid contracts he doesn’t like.
Count Two: Takings Clause
The Takings Clause is most commonly brought up in the context of eminent domain. For instance, if someone has real property on land where the government needs to build a highway, the government can’t just take the land. It must provide just compensation or not take it at all.
Disney claims that the Florida government wrongfully took Disney’s private property, meaning the rights granted in the Contracts, in violation of the Takings Clause.
Count Three: Due Process Violation
The US Constitution states that “No person shall be deprived of life, liberty, or property, without due process of law.” What constitutes due process is somewhat of an amorphous concept that even has a circular definition as being “the process that is due.”
Disney alleges that DeSantis’ decision to treat the Contracts as void failed to provide the process that was due under the circumstances. Disney argues the bills were passed without serious consideration of the surrounding private and state interests.
Count Four: First Amendment Violation
The First Amendment protects the Freedom of Speech. Disney alleges that DeSantis voided the Contracts as retaliation for Disney speaking out against the Don’t Say Gay law.
The One Disney Claim Independent of the Land Use Contracts.
Disney only asserts one cause of action that is independent of the validity of the Contracts.
Count Five: First Amendment Violation
The fourth cause of action was limited only to allegations that DeSantis wrongfully voided the Contracts. This fifth cause of action expands Disney’s request to the very beginning of the dispute. Disney claims that SB4C and HB9B, which are the bills that stripped away their control over Reedy Creek, were all retaliatory in violation of free speech protections.
Disney, therefore, wants the Court to strike down SB4C, HB9B, and SB1604. This would theoretically reinstate Reedy Creek as it was before DeSantis started his campaign against Disney.
How that would work in practical terms is very unclear.
The Board’s Lawsuit Against Disney
Before I get into the details of the Board’s Complaint, I will provide the case details:
Case Name: Central Florida Tourism Oversight District v. Walt Disney Parks and Resorts U.S., Inc.
Case Number: 2023-CA-011818-O
Court: 9th Judicial District for the County of Orange, Florida
Online Access: https://myeclerk.myorangeclerk.com/Cases/Search (search using the case number above)
What the Board is Asking the State Court to Do.
DeSantis is asking the state court to confirm that the Contracts are void. That’s it.
If DeSantis can get a ruling that the Contracts aren’t enforceable at all, there would be no point for the Federal court to rule on whether the laws voiding the contracts are unconstitutional. That question would be moot. Even if the court agreed with Disney, you would still end up with unenforceable contracts.
The Board’s arguments as to why the contracts are unenforceable are very technical and overlap in reasoning. They essentially boil down to three main issues.
Alleged Procedural Defects
First, the law requires notice of a potential development agreement to be mailed to all affected property owners before the first public hearing. The Board argues Disney did not do this before the first meeting on January 25, 2023.
Second, Fla. Statute 163.3223 states:
Any local government may, by ordinance, establish procedures and requirements, as provided in ss. 163.3220-163.3243, to consider and enter into a development agreement with any person having a legal or equitable interest in real property located within its jurisdiction.
The Board argues that Disney did not have procedures and requirements set forth by ordinance. This failure, the Board argues, is fatal to the Contracts.
Third, the Board argues that Disney lacked authority to enter into the Contract without the cities of Bay Lake and Lake Buena Vista, which are within the District, also participating in and signing off on the Contracts.
The remaining arguments are more of the same: that Disney overreached in these 30-year, self-serving contracts, disregarding the interests of Florida. It’s somewhat of a shotgun approach to hitting the target.
Why are Disney and the Board in Different Courts?
Disney brought their case in Federal Court because their lawsuit is based on a federal question: i.e., Did DeSantis violate the U.S. Constitution?
That being said, DeSantis believes Disney is in federal court to forum shop. DeSantis has stated that the judge in the Disney case has a track record of ruling against him. So DeSantis wants to keep this battle away from the Federal Court.
In contrast, whether the Contracts are enforceable under Florida law is a question of Florida state law and not federal law. Therefore, the state court would be best suited to determine that question.
And, like Disney, DeSantis believes he will have a better chance of success if he does a little forum shopping himself.
There will likely be motions in both courts arguing about how the cases should proceed. Disney will argue that the US Constitution preempts state law. It would argue that it would be impractical to reach a question on the state law issues if Disney prevails on their Fifth cause of action (violation of First Amended for all bills).
The Board will argue that the state case must move forward because Disney’s federal case relies on the validity of the Contracts.
Meanwhile, DeSantis will try to push his case through the state court.
What’s your Opinion?
I remain of the opinion that DeSantis unconstitutionally retaliated against Disney.
However, I think the Board has a good point that Disney may not have followed the correct protocols for the Contracts. Moreover, I can only assume that the Florida government has a right to dissolve special districts in general. So if Floridians want special districts to have governor-appointed boards, I think they will eventually get that. But if Florida is just leveling the playing field, any special district that primarily benefits a corporation should have the same type of board oversight–not just Disney.
Finally, if the Board prevails in showing that Disney overreached in their Contract, it seems that would only justify DeSantis’ concerns about unilateral corporate power over the District. He would say, “See, they’re just trying to pull a fast one wherever they can.”
That’s my opinion so far. What’s yours? Leave a comment or take the poll!
