Gist of the Case
Disney World sits within a special taxing district established in 1967 (the “District”), which is essentially a super-HOA. This District is governed by a 5-member Board. The Board determines what development happens within the District and manages the public services provided within its boundaries. In this way, the Board has significant influence over what happens at Disney World.
When the Florida Legislature created the District, it directed that the 5-member Board would be elected by the landowners within the District. Since all of this land was owned almost exclusively by Disney, Disney controlled who was on the Board and, thus, had controlled the Board and thereby also controlled the development and provision of public services within the District.
This was the case from 1967 until 2022, when the DeSantis-led government stripped away Disney’s control over this Board. DeSantis did this by changing the board from being elected by the landowners to being appointed by the governor. DeSantis then threatened that his newly appointed Board could do whatever they want within the District, including approving the building of a state prison.
As this government takeover was looming, Disney and the outgoing Board entered into certain Land Use contracts to secure 30-year development plans that were already in place. These land use contracts would make the DeSantis Board contractually bound to them.
In response, DeSantis passed a law stating that these contracts could not be enforced until the newly incoming Board had an opportunity to affirm or reject them. Lo and behold, the DeSantis Board refused to affirm the land use contracts.
Disney then sued.
Disney alleges that DeSantis and his allies’ weaponized their political powers to retaliate against Disney for making public comments condemning the passage of a Florida law called the “Parental Rights in Education Act”, or, as its detractors would call it, the “Don’t Say Gay” law.
Disney is asking the court to rule that DeSantis’ conduct is unconstitutional. More specifically, Disney is asking the court to rule that its Land Use contracts over the area are valid and to order that DeSantis is prohibited from enforcing unconstitutional legislation.
Main Legal Question
Did DeSantis wrongfully retaliate against Disney in violation of the U.S. Constitution so that his actions against Disney are unlawful?
File Information
Court: U.S. District Court, Northern District of Florida
Case No.: 4:23-cv-00163
Date filed: April 26, 2023
Caption: Walt Disney Parks and Resorts U.S., Inc. v. DeSantis, et al.
Online docket: https://ecf.flnd.uscourts.gov/cgi-bin/iquery.pl(Pacer subscription required)
The Parties
Walt Disney Parks & Resorts U.S., Inc. (“Disney”), Plaintiff
Disney owns and operates Disney World in Florida.
As an aside, I went there in high school to sing in a Christmas concert. It was no less than spectacular. Epcot Center was my favorite area.
Ronald D. DeSantis, Defendant
DeSantis is being sued in his official capacity as Governor of Florida. According to his campaign website, he went to university at Yale where he played baseball. He then went to Harvard Law School. He was then a JAG officer (ie: attorney) for the Navy.
After the Navy, it sounds like he was a prosecutor (his campaign website touts he “served as a federal prosecutor, where he targeted and convicted child predators.”)
In 2012, he was elected to the US House of Representatives for Florida and then became the governor of Florida in 2019, which is his role as of the commencement of this lawsuit.
There is of course a lot of talk that he will be running for President for 2024, but he has not yet declared his candidacy.
Meredith Ivey, Defendant
Ivey is being sued in her official capacity as Acting Secretary of the Florida Department of Economic Opportunity (“DEO”). Her LinkedIn account notes that she is Chief of Staff of the DEO, which I believe was her role prior to being named as Acting Secretary.
The mission of the DEO is to “assists the Governor in advancing Florida’s economy by championing the state’s economic development vision and by administering state and federal programs and initiatives to help visitors, citizens, businesses, and communities.”
Prior to the DEO, she worked with DeSantis since he became governor in 2019. All of her LinkedIn experience appears to be very closely associated with various roles in the Republican Party or affiliated groups.
The Central Florida Tourism Oversight District (“CFTOD”) Board, Defendants
The next five defendants are all part of the CFTOD Board and are named in their capacities on that board. They were all appointed to the Board in February 2023. Here are those members:
Martin Garcia, Chair
Garcia owns/chairs a private equity investment company called Pinehill Capital Partners. Prior to this role, he practiced law. While in college and law school, he got involved in commercial real estate by purchasing two apartment complexes and a small shopping center, which deals were financially supported by his father.
His father continued to purchase real estate until eventually Garcia left his law practice to help manage the properties and investments. It appears that this continues to be a family affair.1
He also previously served on the board of a local airport, where he resigned allegedly due to concerns about their airport’s accounting or investment practices.2
Garcia is a Republican and served as a Campaign Chair for a Republican Attorney General, Pam Bondi. Pinehill Capital also donated $50,000 to DeSantis’ campaign prior to his appointment as Chair of the Board.3
Michael Sasso, Member
Sasso is an attorney in Miami, Florida, and is a partner at a firm with his father: Sasso + Sasso. https://www.floridabar.org/directories/find-mbr/profile/?num=93814. He graduated from Barry University School of Law in or around 2011. I hadn’t heard of that law school before. It is not a particularly high-ranked school in the current U.S. News rankings, but Sasso seems to have done quite well and I’m sure the school would tout him as a success story.
DeSantis previously appointed Sasso to the Judicial Nominating Commission for Florida’s Ninth Judicial Circuit and to Florida’s Public Employee Relations Commission.
Brian Aungst, Jr., Member
Aungst is (you guessed it!) an attorney. He is a shareholder at a law firm in Florida. He earned his JD from the University of Florida in 2008.
His father, Brian Aungst, Sr, is the former mayor of Clearwater, Florida, from 1999-2005. Aungst Sr was instrumental in the substantial redevelopment and unprecedented economic growth of Clearwater during his time as mayor. In fact, he is presently serving as interim mayor of Clearwater as of March 2023.
Ron Peri, Member
Peri’s first interest is being an evangelist for Christianity. While pursuing his mission, he worked professionally in the computer technology arena. In 1997, he created a company called Radixx International, Inc, which created reservation software systems for airlines. That company now serves over 40 airlines in 5 continents. It was acquired in 2019 for approximately $110 million.4
Peri continues to run his self-supporting ministry called “The Gathering” which includes a focus on “the miracles that formed and protected America.”5
Bridget Ziegler, Member
Ziegler is likely the most vocal and outspoken board member. Her LinkedIn profile states she is “Training the Next Generation of Conservative Leaders.” It appears her focus is on training conservatives to take school board positions.
As a member of the school board, she takes on many conservative issues and helped draft the Florida Parents’ Bill of Rights, which directs that the government “may not infringe upon the fundamental rights of a parent to direct the upbringing, education, health care, and mental health of a minor child.”
Bloomberg ran a three-part podcast series on her dubbing her the “School Board Queen.” (I have not listened to this podcast but will probably check it out).
John Classe, Defendant
According to his LinkedIn, since 2016, Classe has been the District Administrator for the Reedy Creek Improvement District, which, as we’ll get into in more detail, was replaced by CFTOD. As Administrator, Classe oversees the development of the District and the governmental services provided within the district (infrastructure, emergency personnel, utilities, etc.).
My impression is that Classe was unwillingly caught up in all of this political turmoil. As all of these events were unfolding, his position was that he wanted to basically keep doing his job at a professional level.6 But it sounds like the CFTOD will be bringing in their own person in as administrator.7
I’m particularly interested to see what Classe has to say as this case develops. However, in the CFTOD Board’s April 28 meeting, they announced that Classe was in discussions to stay with the Board in a different role8, so I imagine that he’s not going to want to say much.
The Reedy Creek Improvement District (Not a Party but Important to the Story)
An improvement district is similar to a municipality (such as a county), except that an improvement district’s powers are more limited in scope. The Florida Department of Economic Opportunity publishes a Special District Handbook which explains:
A special district means . . .
“. . . a unit of local government created for a special purpose, as opposed to a general-purpose, which
has jurisdiction to operate within a limited geographic boundary and is created by general law, special act, local ordinance, or by rule of the Governor and Cabinet.” (Section 189.012(6), Florida Statutes)
Reedy Creek was created in 1967 and is an independent special district. The area includes all of Disney World and some surrounding area.
According to the District’s website, the District’s duties are to:
- Oversee land use and environmental protections within the District,
- Provide essential public services, including:
- fire protection
- emergency medical services
- potable water production, treatment, storage, pumping & distribution,
- reclaimed water distribution,
- chilled water systems,
- wastewater services,
- drainage and flood control,
- electric power generation & distribution, and
- solid waste and recyclables collection & disposal);
- Regulate the EPCOT Building Code; and
- Operate and maintain all public roadways & bridges.
The District may also “assess[] taxes and fees to the landowners and lessees, within the District” and “issue[] ad valorem and utility revenue bonds.”
Generally, it manages and maintains the physical infrastructure needed to improve the District and governs the physical location surrounding Disney World. The District does not oversee schools, maintain a court or have judicial powers, or maintain public social services.
The Landowners within the District (ie: basically Disney) are solely responsible for paying the cost of providing these infrastructure services. Local taxpayers, meaning residents of Orange and Osceola County, do not have to pay for building or maintaining those services.
The District is essentially a super-HOA that oversees a vast common area that covers the geographic area of Disney World. Whoever controls the Board controls that common area.
The Legal Causes of Action
Disney is requesting “declaratory” and “injunctive” relief. Declaratory relief means that Disney wants the judge to make a ruling on certain legal rights. Injunctive relief means Disney wants the court to issue an order that the Defendants may not take certain actions.
In this case, Disney is asking the judge to declare that the Defendants’ conduct was improper and that Disney’s contracts over land use and restrictions are enforceable. Disney is also asking the court to enter an order prohibiting the Defendants from enforcing unlawful government action.
The Story of the Case
For the purposes of this story, and since all of the Defendants are coordinated or allied with DeSantis (except for maybe Classe), I will be referring to all of the Defendants collectively as DeSantis, which term constitutes DeSantis, the remaining defendants (except for Classe), and his allies.
Part 1: The Reedy Creek Improvement District is Created to Benefit Disney and Florida.
In 1963, Walt Disney surveyed the swamplands in central Florida and had visions of a theme park. At that time, the are he surveyed was just a swampland with no infrastructure. He pitched his vision to the government of Florida and Florida believed it would benefit from the tourism Disney’s park would bring.
To make the dream a reality, in 1967, Florida created the Reedy Creek Improvement District. It charged the District with the duty to develop and manage the land that would become Disney World.
From 1967 to today, Disney World has been a tremendous economic success; not just for Disney, but for Florida too. It brings tens of millions of tourists to Florida each year. This, in turn, brings employment and economic well-being to the people of Florida (and tax revenue).
Throughout this time, Reedy Creek fulfilled its duties to manage development and provide services to the area. Everything seemed to be going for the most part swimmingly…until Spring 2023.
Part 2: Disney Upsets DeSantis with its “Woke” Agenda.
In March 2022, a DeSantis-led Florida Legislature passed a bill called the “Parental Rights in Education Act,” which was monikered in the media as the “Don’t Say Gay” law. The most discussed part of the law reads:
Classroom instruction by school personnel or third parties on sexual orientation or gender identity may not occur in kindergarten through grade 3 or in a manner that is not age appropriate or developmentally appropriate for students in accordance with state standards.9
Disney’s CEO, Bob Chapek, was under a lot of pressure to make a statement on behalf of Disney about this “Don’t Say Gay” legislation. Apparently, he even called DeSantis personally to raise concerns about the law.
Under this pressure, Chapek issued a company memo affirming that Disney would continue to work towards a more inclusive, tolerant, and respectful world.10 He did not, however, condemn the legislation. His memo, therefore, left people dissatisfied.
Dipping its toes further into the water, Disney posted the following statement:
To ALL who come to this happy place, welcome,
Disney Parks, Experiences, and Products is committed to creating experiences that support family values for every family, and will not stand for discrimination in any form. We oppose any legislation that infringes on basic human rights, and stand in solidarity and support our LGBTQIA+ Cast, Crew, and Imagineers and fans who make their voices heard today and every day.11
Prior to signing the bill, DeSantis commented that he believed Disney fell for false narratives regarding the bill12:
Florida legislature passed the Parental Rights in Education Act. Disney then issued a statement directly attacking the legislation:
Florida’s HB 1557, also known as the ‘Don’t Say Gay bill, should never have passed and should never have been signed into law. Our goal as a company is for this law to be repealed by the legislature or struck down in the courts, and we remain committed to supporting the national and state organizations working to achieve that. We are dedicated to standing up for the rights and safety of LGBTQ+ members of the Disney family, as well as the LGBTQ+ community in Florida and across the country.13
DeSantis did not like this coming from Disney. He basically saw this as a woke California corporation trying to dictate what children across the nation in Florida learn. In a press conference, DeSantis stated, “I think they crossed the line… We’re going to make sure we’re fighting back when people are threatening our parents and threatening our kids.”14. In his book, The Courage to Be Free, DeSantis indicates that Disney’s conduct was a “declaration of war.”15
In a fundraising email, DeSantis wrote: “Disney and other woke corporations won’t get away with peddling their unchecked pressure campaigns any longer.”
DeSantis’ press secretary issued a warning to corporations saying, “Go woke, go broke.”
In a similar warning, DeSantis announced that Florida is “the state where woke goes to die.”16
DeSantis then took action.
Part 3: DeSantis Takes Action Against Disney.
The Florida Constitution
As DeSantis considered how to attack Disney, he looked at the Florida Constitution, which was amended and ratified in 1968, one year after the Reedy Creek Investment District was created. The amended Florida Constitution states:
There shall be no special law or general law of local application pertaining to . . . private incorporation or grant of privilege to a private corporation.17
This gave him the legal hook he needed because he could argue that Reedy Creek gives private privileges to Disney in violation of the Florida Constitution.
Senate Bill 4C
On April 19, 2022, DeSantis called a special legislative session to address Disney, without specifically naming Disney.18 In this proclamation, DeSantis noted that the Florida Constitution “permits the creation of independent special districts that appropriately serve the public interest” but that it “prohibits special laws granting privileges to private corporations.” Therefore, DeSantis asked the Florida Legislature “to consider whether such independent special districts [created before 1968] should be subject to the special law requirements of the Florida Constitution of 1968.”
The response to DeSantis’ directives was the introduction of Florida Senate Bill 4C on that same day (an identical bill went through the House and was substituted by SB 4C). SB 4C states:
[A]ny independent special district established by a special act prior to the date of ratification of the Florida Constitution on November 5, 1968, and which was not reestablished, re-ratified, or otherwise reconstituted by a special act or general law after November 5, 1968, is dissolved effective June 1, 2023.19
Since Reedy Creek had not been reestablished, re-ratified, or otherwise reconstituted after 1968, SB 4C would dissolve it.
Upon the introduction of the bill, Florida representative Randy Fine tweeted:
BREAKING: Disney is a guest in Florida. Today, we remind them. @GovDeSantis just expanded the Special Session so I could file HB3C [(which, again, was identical to SB4C that ultimately passed)] which eliminates Reedy Creek Improvement District, a 50 yr-old special statute that makes Disney exempt from laws faced by regular Floridians.
Although SB4C impacts 6 special districts, Fine conceded in a committee meeting that “this bill does target one company. It targets The Walt Disney Company.” Of course, he clarifies that the reason the bill does this is because Disney is “the only company in the state that has been given the right to govern itself.” He contrasted this to Universal Studios or SeaWorld and argued that Disney should have the same playing ground as all other companies.20
SB4C would, in theory, give Disney the opportunity to re-ratify Reedy Creek, and the 5 other special districts would have to do the same, but obviously that wasn’t going to happen. Reedy Creek’s dissolution was inevitable.
House Bill 9B (HB9B)
In the months following the passages of SB4C, rumor flowed that DeSantis would not allow Reedy Creek to dissolve, but would instead reenact it with certain adjustments that strip control from Disney and put control into DeSantis’ hands. And this is exactly what HB9B did.
With the bill approved on February 27, 2023, DeSantis renamed “Reedy Creek Improvement District” to “Central Florida Tourism Oversight District.” The Bill also shifted the power to select the District’s board. Under Reedy Creek, the board was selected by a vote from the District’s landowners. This, of course, meant that Disney hand-selected the board since it is the largest landowner of the district by far.
Under the CFTOD, however, the Board is hand selected by the Governor, subject to confirmation by the Senate. In this way, DeSantis is able to keep Disney under his thumb by appointing his own people to the Board. Any improvement plan would have to go through him or his allies.
Flexing its muscle, DeSantis has touted that the Board may decide to place more taxes on the hotels within the District, implement toll roads, develop its own amusement parks, or even build a prison. While I believe these statements are mostly rhetoric, it does seem that DeSantis intends to make it a point that he is now in charge of the District.
Ultimately, HB9B allowed DeSantis to take over the Board with his own people. Now he can control or have oversight over what happens within the improvement district, rather than having Disney’s hand-picked people run the show.
Part 4: Land-Use and Restrictive Covenants.
A little over a month before the passage of HB9B, Disney and Reedy Creek entered into two contracts: a development contract and a restrictive covenant agreement (collectively, the “Contracts”). Without going into the details, these Contracts lock in Disney’s development and land use plans through 2032. The Contracts basically mean that the incoming CFTOD board, which was only speculated at the time, would not have much of a say in Disney’s ongoing development plans.
These contracts would give Disney control over the next 30 years, with the possibility of further extensions.
In response, the newly mined CFTOD Board moved to declare the Contracts as void. The Board claims that there were a number of procedural deficiencies in the approval of these Contracts. These deficiencies, the Board claims, are fatal to the Contracts and render them completely void.
DeSantis wasn’t satisfied with just that. In response to Disney’s Contracts, he instructed his Chief Inspector General to launch a wide-ranging civil and criminal investigation of Disney. The purpose of this investigation is to search for “[a]ny financial gain or benefit derived by Walt Disney World as a result of RCID’s actions and RCID’s justifications for such actions.” The Inspector General is to refer “[a]ny legal or ethical violations . . . to the appropriate authorities.”21
I will say that the government onslaught against Disney, even just trying to summarize it all for this story, feels unyielding and robust. It’s as impressive at it is unnerving.
Part 5: The Lawsuits Begin
At this point, Disney determined that it had to take legal action. Again, Disney is asking the Federal Court to rule that the Contracts are enforceable and that DeSantis’ conduct against Disney has violated the U.S. Constitution.
In response, the CFTOD Board filed its own lawsuit in Florida State Court. This lawsuit asks the state court to rule that the Contracts are void based on procedural shortcomings alleged by the Board.
Read the Lawsuit for Yourself
The above is my version of the story as I understand it so far. I took my version mostly from the Complaint Disney filed, but the story in a Complaint is always one-sided. If you want to read the Complaint for yourself, have at it…
What Happens Next
This case is in Litigation Phase 1, which is the pleadings phase. The Board will have the opportunity to file a response to the complaint. Given the nature of the dispute, I’m guessing that the response will be some sort of motion asking the court to throw out the case. The Board may argue that the federal question is subsumed by the state law question as to the enforceability of the Contracts.
The Board could also file a counterclaim in federal court, but they will file their own lawsuit in state court.
My Initial Impressions
In my view, I think Disney is correct that DeSantis is retaliating against it for the public comments about the Don’t Say Gay law. This doesn’t sit well with me. Here’s my analogy, say you live in an HOA and you really help improve your home and the surrounding area. Your HOA takes care of a community pool and playground that benefits the community around your HOA. You speak out against a law and the governor then comes after you, takes control of the HOA board, fills the Board seats with people who don’t even live there, and threatens to turn the playground into a landfill. If you try to stop it, you get investigated for criminal or civil misconduct and other threats. Then the lawyers find legal arguments as to why the takeover was legal. I don’t care what those legal arguments are, the situation is just plain wrong.
At the same time, DeSantis will likely argue that, yes, Disney’s interjection on the issue was a catalyst for the enactment of recent legislation. However, once it was brought to their attention that Disney’s arrangement was unconstitutional under Florida’s law, they were compelled to act in a way that fairly applies Florida’s long-standing and supreme law of the land to all Floridians uniformly. The fact that Disney is the only corporation impacted by the legislation only underscores the fact that Disney was given special treatment that it shouldn’t have been given in the first place. Fifty+ years of an unconstitutional arrangement does not mean you cannot fix the problem.
For this situation, I just feel like this case is more of the first scenario than the second. It’s very unsettling.
What Do You Think?
However this shakes out, I’m sure it will prove to be a fascinating journey. If you want case updates, please subscribe to my newsletter. In the meantime, take the poll!
- Tampa Bay Business Journal
- Tampa Bay News
- The Daily Beast
- Sabre Press Release
- https://thegathering.org/about/
- Dayton News
- Wesh 2 News
- https://youtu.be/beREOBaz-Sc?t=8245
- Bill Text (PDF)
- Disney CEO addresses silence on Florida’s ‘Don’t Say Gay’ bill | wtsp.com
- Disney posts pro-LGBT statement as DeSantis prepares to sign bill | wtsp.com
- Disney posts pro-LGBT statement as DeSantis prepares to sign bill | wtsp.com
- Statement From The Walt Disney Company On Signing Of Florida Legislation – The Walt Disney Company
- DeSantis says Disney ‘crossed the line’ in calling for ‘Don’t Say Gay’ repeal – POLITICO
- Disney’s Complaint, 37
- Why I Stood Up to Disney – WSJ
- Florida Constitution, Sec. 11(a)(12)
- Proclamation 04-19-22 (flgov.com)
- Senate Bill 4C (2022C) – The Florida Senate (flsenate.gov) (View Bill Text)
- House Video Player: House State Affairs Committee – April 19, 2022 (myfloridahouse.gov) (starting at 1:12:00)
- DapsMagic.com
