Disney sues Florida Gov Ron DeSantis

Walt Disney Co. sued Florida Gov. Ron DeSantis on Wednesday, alleging the Republican has waged a “relentless campaign to weaponize government power” against the company amid a protracted fight over a controversial classroom bill.

The federal lawsuit alleges that DeSantis “orchestrated at every step” a campaign to punish Disney that now threatens the company’s business.

The move dramatically escalates the drawn-out feud between DeSantis, who is expected to become a top Republican contender in the 2024 presidential race, and Disney, which is among Florida’s largest employers.

The fight began last year, when Disney came out against a Florida bill limiting classroom discussion of sexual orientation or gender identity, dubbed “Don’t Say Gay” by critics. Soon after, the governor and his allies targeted the special tax district that has allowed Disney to essentially self-govern its Florida operations since the 1960s.

The lawsuit was filed on the same day that the district’s board of supervisors, which DeSantis had picked to take control over Disney’s Orlando-area parks, moved to undo a development deal that it says Disney struck to thwart its power.

The panel unanimously voted to declare “void and unenforceable” that development deal, which was approved shortly before DeSantis replaced the Disney-approved board with his preferred supervisors.

The lawsuit called that action the “latest strike,” saying the development contracts “laid the foundation for billions of Disney’s investment dollars and thousands of jobs.” The company noted its plans to invest $17 billion in Walt Disney World over the next decade, yielding an estimated 13,000 new jobs on top of its more than 75,000 current “cast members.”

“The government action was patently retaliatory, patently anti-business, and patently unconstitutional,” Disney alleged in the civil complaint in U.S. District Court in Tallahassee, Florida.

Disney is asking the court to rule that the board’s legislative step was unlawful and unenforceable.

In a response, DeSantis’ office suggested the fight hinged on Disney’s special tax and governance privileges, not political retaliation.

“We are unaware of any legal right that a company has to operate its own government or maintain special privileges not held by other businesses in the state,” DeSantis’ communications director, Taryn Fenske, said in a statement to CNBC.

“This lawsuit is yet another unfortunate example of their hope to undermine the will of the Florida voters and operate outside the bounds of the law,” Fenske said.

Disney’s lawsuit, however, argued that “this is as clear a case of retaliation as this Court is ever likely to see.”

“There is no room for disagreement about what happened here: Disney expressed its opinion on state legislation and was then punished by the State for doing so,” the lawsuit said.

Disney’s lawyers noted that until a year ago, DeSantis and his allies had no issue with the self-governing structure, formerly called the Reedy Creek Improvement District.

That entity, created in 1967, gave Disney regulatory control over public services and other functions in the 25,000-acre area encompassing its Florida parks and resorts. Disney paid millions of dollars annually in taxes levied through Reedy Creek to fund those services, on top of its local tax obligations.

DeSantis signed legislation to dissolve that special designation just weeks after Disney denounced the classroom bill.

The move raised fears that Florida taxpayers in the two surrounding counties could be burdened with a huge tax bill. In February, the state Legislature passed new legislation keeping the district intact, but allowing DeSantis to appoint its five board members.

In March, the newly picked board of the district — now called the Central Florida Tourism Oversight District — said their Disney-aligned predecessors had stripped them of many of their powers on the way out the door.

“The bottom line is that Disney engaged in a caper worthy of Scrooge McDuck to try to evade Florida law. Its efforts are illegal and they will not stand,” said David Thompson, identified as trial counsel for the board, at a public meeting last week.

On Wednesday, board Chair Martin Garcia said the new body had tried to work with Disney, but the company left them with a “legal mess.”

“Disney picked the fight with this board,” Garcia said. He also said that taxes will have to go up to pay for lawyers hired by the board to evaluate Disney’s “eleventh-hour agreements.”

“We’re going to have to raise taxes to pay for that,” he said.

The board also voted for a resolution to effectively ban Disney’s Orlando-area parks from imposing future Covid-related restrictions.

Disney’s lawsuit came as DeSantis was on an overseas trip, further stoking expectations that the governor is gearing up for a presidential run.

DeSantis’ engagement in divisive culture issue battles, including his fight against Disney, has elevated him to national prominence. He easily won a second term as governor in the November midterms and has consistently been near the top of polls of the prospective 2024 Republican presidential primary field.

But he has come under heavy attack from former President Donald Trump, currently the favorite for the GOP nomination. And the governor’s decision to keep up his fight with Disney has recently drawn criticism from others in his party.

DeSantis is expected to hold off on a presidential announcement until after Florida’s current legislative session ends May 5.

Nikki Haley, the former South Carolina governor and United Nations ambassador now running for the Republican presidential nomination, took a dig at her potential primary rival as she reacted to the lawsuit.

“My home state will happily accept your 70,000+ jobs if you want to leave Florida,” Haley tweeted at Disney on Wednesday afternoon.

South Carolina is “not woke, but we’re not sanctimonious about it either,” she added — an unsubtle reference to DeSantis, whom Trump has nicknamed “Ron DeSanctimonious” on the campaign trail.

— CNBC’s Stephen Desaulniers contributed to this report.