Disney Prevails in Shareholder Lawsuit Over Ongoing Feud with State of Florida
According to a report from Bloomberg Law, Disney has prevailed in a shareholder lawsuit related to its ongoing feud with the State of Florida and its Governor Ron DeSantis. Within this blog post, our Miami shareholder rights lawyer provides an overview of the dispute and highlights some notable lessons for shareholder litigation more broadly.
Delaware Court: Shareholders Did Not Have Right to Access Disney Internal Records
In a case filed in Delaware’s Chancery Court, Disney successfully fended off a shareholder lawsuit concerning its stance against Florida’s so-called “Don’t Say Gay” bill. The bill is a controversial law that has sparked a sharp dispute between the famous company and Florida Governor Ron DeSantis.
A shareholder filed a lawsuit seeking access to Disney’s internal documents under Section 220 of the Delaware General Corporation Law. The shareholder argued that Disney’s fight with the State of Florida amounted to “corporate mismanagement.”
The Delaware Chancery Court determined that Disney’s engagement on the bill did not amount to mismanagement, regardless of potential financial or business repercussions. As such, the shareholder did not have the right to access internal corporate records.
Court Ruling: Political Views of Corporate Leaders Not a Conflict of Interest
In a significant aspect of the ruling, the Delaware Chancery Court clarified that the political views of corporate leaders do not constitute a conflict of interest. Why did this matter? It came as a response to the assertion that Disney’s board was influenced by their affiliations with LGBT rights groups. The court recognized the legitimacy of corporate leaders having personal political stances and held that this alone does not qualify as a conflict. Beyond that, the ruling highlighted that Disney’s board exercised due diligence and engaged in thoughtful deliberation, which is expected when a corporation takes a stance on matters of social significance.
What to Know About Shareholder Disputes and Corporate Conflicts of Interests
Shareholder disputes in corporations are disagreements among shareholders or between shareholders and the company management. These disputes often arise due to divergent visions regarding the company’s direction, concerns over management decisions, or perceived breaches of fiduciary duty.
Conflicts of interest are situations where an individual or entity has competing interests or loyalties. In a corporate setting, conflicts of interest occur when a person’s personal interests interfere with their ability to make decisions in the best interests of the company. This is particularly significant for corporate officers and directors who have fiduciary duties of care and loyalty to the corporation and its shareholders.
Consult With Our Southeast Florida Shareholder Litigation Attorney for Help
At Pike & Lustig, LLP, our Miami shareholder dispute lawyers are always prepared to invest the time, resources, and attention to detail to help our clients find the best solutions. If you have any questions about a shareholder dispute, please do not hesitate to contact us at our Miami law office or our West Palm Beach law office for a strictly confidential initial consultation.
Source:
news.bloomberglaw.com/esg/disney-defeats-shareholder-lawsuit-over-feud-with-desantis
