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Explainer: How Disney“s and DeSantis“ dueling lawsuits might play out

2023-05-09T10:30:45Z

Walt Disney Co (DIS.N) and Florida Governor Ron DeSantis have been embroiled in an increasingly bitter dispute, starting when the company criticized a Florida law last year, which has led to dueling lawsuits.

THE DISNEY LAWSUIT AGAINST DESANTIS

The entertainment giant sued the Republican governor on April 26 in federal court, claiming he was “weaponizing” state government in retaliation for the company’s criticism of a law that banned classroom discussion of sexuality and gender identity with younger children. Opponents labeled the measure the “don’t say gay” law.

The company alleged DeSantis rallied the Republican-controlled legislature to strike back at “woke Disney” and seize control of an administrative district, created in 1967, that helped Disney develop theme parks and resorts. The district, originally known as Reedy Creek Improvement District, was also named as a defendant.

FLORIDA’S LAWSUIT AGAINST DISNEY

Rather than responding in federal court, the administrative district, which lawmakers put under DeSantis’ control and renamed the Central Florida Tourism Oversight District, fired back on May 2, countersuing Disney in state court.

The new district leadership accused the company of striking last-minute “backroom” deals with the prior board, just before the legislature changed the board structure.

The new board asked the state court to void those Disney-friendly deals, which gave the company control over development in the district for decades and which limited the new board’s authority.

Disney’s lawsuit was filed in federal court and alleges that DeSantis violated the company’s protections under the U.S. Constitution, including its First Amendment right to free speech.

It also alleges the new district board violated of the Due Process, Contracts and the Takings Clauses of the U.S. Constitution by declaring void the company’s development agreements that were struck with the old board. Disney is asking the court to strike down laws that created the new board and that voided the agreements with Disney.

In contrast, the state court lawsuit against Disney focuses on the procedures the old board followed in approving the agreements with Disney. It alleges those deals were approved at meetings that failed to follow state rules for things like giving the public advance notice. The Florida district is asking the state court to void the Disney agreements.

Disney’s case is proceeding before U.S. District Judge Mark Walker in Tallahassee, who previously has struck down some laws that define the governor’s conservative agenda. The Florida district’s case is in state court before Circuit Judge Margaret Schreiber in Orlando.

The district could file a motion in federal court to ask Walker to dismiss or pause Disney’s federal case while the state court proceeds. Legal doctrines hold that federal judges should refrain from hearing a case where there is a related state court proceeding, particularly when a state court decision could resolve the federal lawsuit.

But Walker might still allow Disney’s federal lawsuit to proceed because the company is claiming a major Constitutional violation, which is the kind of claim a federal judge is inclined to hear.

Both cases could proceed simultaneously. While the legal theories are different, both courts were asked to decide if the agreements between Disney and the prior board were valid, so it’s conceivable that the judges could reach conflicting answers. In that scenario, it is likely that the side that prevails first would ask the other judge to respect that ruling. The prevailing party would likely cite the doctrine of res judicata, which says that a claim that reaches judgment in one court should not be relitigated in a second.

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