By Jim Saunders ©2023 The News Service of Florida
TALLAHASSEE — Rejecting allegations of potential wrongdoing, a Delaware judge this week sided with The Walt Disney Co. in a stockholder’s attempt to get records related to the company’s opposition to a 2022 Florida law that restricted instruction about sexual orientation and gender identity in schools.
Attorneys for stockholder Kenneth Simeone filed a lawsuit in December after Disney declined to provide some requested records, such as emails. The company’s high-profile opposition to the law led to a feud with Gov. Ron DeSantis that, in part, resulted in Disney losing control of a Central Florida special-taxing district.
Simeone’s attorneys sought information about potential “breaches of fiduciary duties” by company leaders, including its board of directors. But Lori Will, a judge on the Delaware Court of Chancery, ruled Tuesday against the request for additional records and said the plaintiff “is not describing potential wrongdoing. He is critiquing a business decision.”
“Although choosing to speak (or not speak) on public policy issues is an ordinary business decision, this case exemplifies the challenges a corporation faces when addressing divisive topics — particularly ones external to its business,” Will wrote. “Individual investors have diverse interests — beyond their shared goal of corporate profitability — and viewpoints that may not align with the company’s position on political, religious, or social matters. Yet stockholders invest with the understanding that the board is empowered to direct the corporation’s affairs. The board may delegate implementation to management, but it alone bears the ultimate responsibility for establishing corporate policy.”
Will said the Disney board “did not abdicate its duties or allow management’s personal views to dictate Disney’s response to the legislation.”
“Perhaps the board could have avoided political blowback by remaining silent on HB 1557 (the law),” Will wrote in the 36-page ruling. “At the same time, doing so could have damaged the company’s corporate culture and employee morale. The weighing of these key risks by disinterested fiduciaries does not evidence a potential lack of due care, let alone bad faith.”
DeSantis and Republican lawmakers targeted Disney after the company in March 2022 opposed the law, which supporters called the “Parental Rights in Education” law — and opponents labeled the “don’t say gay” bill. The law barred instruction about sexual orientation and gender identity in kindergarten through third grade.
The GOP-controlled Legislature early this year passed a measure that revamped the former Reedy Creek Improvement District, which for decades gave Disney self-governance powers over its Orlando-area property. The measure, in part, allowed DeSantis to appoint board members of the renamed Central Florida Tourism Oversight District.
The feud between Disney and DeSantis has drawn widespread attention and become part of DeSantis’ 2024 presidential campaign. Will’s ruling noted that Disney’s stock price fell from $145.70 a share on March 1, 2022, to $86.75 a share on Nov. 9, the day after DeSantis was re-elected governor. It was hovering around $89 a share as of mid-day Wednesday.
Disney, like many companies, is incorporated in Delaware. Attorneys for Simeone in July 2022 filed what is known under Delaware law as a demand to inspect corporate books and records, Will’s ruling said. Disney provided information such as corporate policies and board minutes related to the Florida law, but the lawsuit sought additional records.
Will’s ruling said Simeone has been a stockholder since 1973 and lives in Kissimmee. But the ruling also pointed to backing of the case by the Thomas More Society, a national group that describes itself online as “the premier legal advocate for the sanctity of life, religious liberty, traditional family values and election integrity.”
“The plaintiff’s (Simeone’s) limited and non-substantive involvement in the demand and litigation further reveals the lawyer-driven nature of this action,” Will wrote.
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