Disney beats investor lawsuit over feud with DeSantis

7:31 pm Tuesday, June 27th, 2023

By Tom Hals

WILMINGTON, Delaware (Reuters) – The Walt Disney Co board did not act negligently when it criticized a sexual identity bill signed by Florida Governor Ron DeSantis, a Delaware judge ruled on Tuesday, in a case the judge said was improperly directed by a conservative legal group.

The ruling by Lori Will of Delaware’s Court of Chancery means that Disney will not have to turn over internal records including years of board members’ emails sought by shareholder Kenneth Simeone, who sued Disney in December.

The shareholder said he wanted the records to investigate possible wrongdoing by directors in connection with the company’s decision to criticize the 2022 law, which critics have derided as the “don’t say gay” law.

While Will said it might turn out to have been a bad business decision, the evidence at trial showed directors did not allow their personal views to dictate the company’s response to the bill.

The judge said Simeone cannot use a provision of Delaware corporate law meant to empower shareholders to investigate boardroom wrongdoing to “search for hypothetical conflicts.”

Disney’s criticism touched off a war of words with DeSantis and led to the state removing the company’s control of a special administrative district that promotes development around the Walt Disney World resort.

DeSantis, who is seeking the Republican presidential nomination, has used his battle against what he calls “woke Disney” to raise his national profile.

Will also found that the lawsuit was brought to benefit the Thomas More Society, a non-profit law firm that champions conservative causes that was paying Simeone’s legal costs. Simeone’s lawyer, Paul Jonna, is a special counsel for the organization.

“The plaintiff’s counsel and the Thomas More Society are entitled to their beliefs,” Will wrote, adding that a corporate records lawsuit “is not a vehicle to advance them.”

Simeone, Jonna and Disney did not respond immediately to requests for comment.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Jamie Freed)