Federal judge dismisses Florida taxpayer lawsuit over Disney World district

A federal judge on Tuesday dismissed a taxpayer lawsuit from Florida residents who sued the state and its Republican governor, Ron DeSantis, over a decision to dissolve Walt Disney Co.’s special self-governing district near Orlando.

The lawsuit, filed last week in U.S. District Court in Miami, alleged that the move to eliminate the district was unconstitutional, violated the state’s legal and contractual obligations and would saddle taxpayers with a $1-billion debt burden.

The legal battle is part of the broader fallout from Disney’s fight with Florida over the Parental Rights in Education law, which opponents have derisively nicknamed “Don’t Say Gay” legislation.

DeSantis last month signed a law that would eliminate Disney’s special tax and self-ruling status in central Florida by axing the Reedy Creek Improvement District, which was created by the state Legislature in 1967 to essentially give Disney its own municipal government.

State lawmakers voted to scrap the district during a special legislative session after Disney said it wanted to see the Parental Rights bill, which LGBTQ activists see as an attack on queer and trans youth, repealed or blocked by the courts.

The decision to dismantle Reedy Creek, covering a 25,000-acre area that is home to Walt Disney World Resort, was widely seen as retaliation against Disney for its stance against Florida’s Parental Rights law, which bans classroom instruction on sexual orientation and gender identity in kindergarten through grade 3. The law allows parents to sue school districts over violations.

In an order dismissing the taxpayer lawsuit, Chief Judge Cecilia M. Altonaga wrote that the complaint was out of the court’s jurisdiction. Her five-page order said state officials could not be sued in federal court over claims arising from alleged violations of state law. She also said that state residents could not sue over alleged violations of Disney’s 1st Amendment rights, only their own constitutional rights.

Additionally, Altonaga noted that the law eliminating the district does not go into effect until July 1 and called the taxpayers’ claims of harm “highly speculative.”

“Plaintiffs’ theory of standing is that the elimination of the Reedy Creek Improvement District might result in financial harm to Plaintiffs by virtue of a tax increase that has not yet been enacted,” Altonaga wrote. “That indirect and highly speculative alleged injury cannot support federal jurisdiction. [The bill] itself will not raise Plaintiffs’ taxes. Again — it is worth emphasizing — the bill does not apply to Plaintiffs at all.”

William Sanchez, a lawyer for the Florida residents who sued the state, did not immediately respond to The Times’ request for comment.

The dismissed complaint was filed on behalf of four Florida residents — three in Osceola County and one in Orange County. Their suit alleged that the state violated legal obligations forbidding it from dissolving the district without resolving its outstanding debt, which some experts have said would be passed on to surrounding counties.

DeSantis press secretary Christina Pushaw applauded the judge’s decision and reiterated the governor’s position that eliminating the district will not create an additional tax burden for Floridians. A plan for shutting down the district has not been released.

“Perhaps this will put to rest the speculation from those who are hoping — with no basis in reality — that this will end in some sort of taxpayer or state burden that partisan critics can use against the governor,” Pushaw said in an email. “In reality, this opportunity can, and should be utilized to generate more taxes from Disney, as the governor has said.”

The district would be eliminated on June 1, 2023, but could be reinstated after that date, meaning that Disney and the state have about a year to come up with a new agreement. The law seeks to dissolve all Florida special improvement districts created before 1968. Disney has not commented on the decision to revoke its special tax status.

The Reedy Creek Improvement District spans roughly 40 square miles in both Orange and Osceola counties. Its boundaries include multiple theme parks, the Disney-owned ESPN Wide World of Sports complex, 175 miles of roadway and the cities of Bay Lake and Lake Buena Vista. The 1967 law allowed the company to transform a sprawling area of undeveloped swampland into Florida’s biggest private employer and a massive driver of tourism.

The dispute over Florida’s Parental Rights legislation and Disney’s response to it has stretched on for weeks, giving DeSantis, a possible 2024 presidential contender, a massive Hollywood foil. Disney Chief Executive Bob Chapek initially resisted speaking out on the Parental Rights bill, saying it would make the company a “political football,” but came out against it amid pressure from employees.

After Chapek voiced his concerns, DeSantis accused Disney of being a “woke” corporation trying to impose liberal values on Florida. Fox News and other conservative media jumped into the culture war, with commentators including Laura Ingraham accusing Disney of pushing a “sexual agenda” on kids.

In another move to punish Disney, a group of Republican lawmakers has vowed to oppose any effort to extend the company’s copyright protection for Mickey Mouse — already extended twice since the original expiration date in 1984.

On Tuesday, Sen. Josh Hawley (R-Mo.) said he plans to introduce legislation to strip Disney of the copyright protections this year.

“No more handouts for woke corporations,” Hawley, also a constitutional lawyer, wrote on Twitter. Disney representatives have declined to comment on the subject.

Times staff writer Hugo Martin contributed to this report.