June 4, 2023

Florida legislation designed to cripple Disney may ultimately help the company, at least in connection with a lawsuit in state court over development at Walt Disney World near Orlando.

Gov. Ron DeSantis and Disney have been sparring for more than a year over a special tax district that includes Disney World. The fight started when the company criticized a Florida education bill that opponents labeled “Don’t Say Gay” — angering Mr. DeSantis, who vowed to show Disney who’s boss.

His punitive actions since then, and Disney’s efforts to protect itself, have resulted in a federal lawsuit, which Disney filed on April 26. It alleged that Mr. DeSantis and his allies were engaged in a “targeted campaign of government retaliation.”

The tax district — recently controlled by Mr. DeSantis — responded by suing Disney in state court. The district’s lawsuit, filed May 1, seeks to overturn contracts with Disney that spell out development plans for the resort. A few days later, at the request of Mr. DeSantis, the Florida legislature passed a bill prohibiting the district from enforcing the contracts. Mr. DeSantis signed it on May 5.

On Tuesday, Disney filed a motion to dismiss the state’s lawsuit. As a matter of legal maneuvering, the filing was routine: Disney wants to close the state case and focus on the federal case.

But the company’s argument to the state judge about why the district’s case should be dismissed was less expected: Mr. DeSantis and his allies in the legislature mooted the lawsuit with their subsequent actions, the filing said. By prohibiting the district from enforcing the contracts, Mr. DeSantis and the legislature rendered “any order that this court might issue — in favor of either party — legally irrelevant.”

“Basically, any statement about the enforceability, nullity or validity of the contracts — regardless — would be an opinion with no real world implications,” Disney added. “Courts in Florida are prohibited from issuing advisory opinions.” The company cited more than 40 court decisions in support of its argument.

Alexei Woltornist, a spokesperson for the tax district, said in an email that Disney’s motion was “completely predictable and an admission that they know they will lose this case.” A spokesperson for Mr. DeSantis was not immediately available for comment.

If the state judge allows the case to proceed, Disney’s filing continued, the case would at the very least have to be put on hold while the federal trial plays out. Disney noted that Florida law “recognized a robust ‘priority principle’ under which state proceedings must be suspended pending a previously filed federal court action.”

Disney’s filing noted that the federal lawsuit not only filed first, but also challenges the constitutionality of the new law barring the district from complying with the development contracts. Resolution of the federal action would “materially affect the viability” of claims in the state action, the filing said.

At the center of the battle between Mr. DeSantis and Disney is the 56-year-old special tax district. The district effectively turned the property into its own county, giving Disney unusual control over fire protection, policing, waste management, power generation, road maintenance, bond issuance, and development planning.

Florida has hundreds of similar counties. One pertains to The Villages, a hulking senior community northwest of Orlando. Another covers Daytona International Speedway and the surrounding area.

In February, lawmakers decided to allow the governor to appoint a board of trustees for the Disney district in an effort to curtail the company’s autonomy. However, when the appointees came forward, they found that the previous Disney-controlled board of directors had approved development contracts limiting the power of the new board for decades to come.

Disney paid and collected a total of $1.2 billion in state and local taxes in 2022, according to the company’s disclosures. Earlier this year, Disney said it had allocated $17 billion for expansion spending at the resort over the next decade, growth that would create an additional 13,000 jobs at the company. Last week, Disney said it was “looking at where it makes the most sense to direct future investment” for theme park construction, a clear reference to Florida’s gridlock.