03 May Did the State of Florida Violate Disney’s Right to Free Speech?
I try very hard not to sound like a lawyer when I write for clients. I write in a clear, simple way to communicate to a law firm’s potential clients. But in the case of Florida’s decision to disband the Reedy Creek Improvement District (the home of Disney World), I think the correct answer is very lawyer-like. We don’t know yet. I believe state government clearly retaliated against Disney for its opposition to a law, but whether it’s a First Amendment violation, at this point, isn’t clear.
What is the Reedy Creek Improvement District?
The district, according to its website, was created in 1967 by the Florida Legislature. It covers about 39 square miles of Orange and Osceola counties. There are 19 landowners within the district, including Walt Disney Co. and its affiliates.
The district oversees land use and environmental protection. It provides essential public services (fire protection, emergency medical services, drinking water, water drainage and flood control, electric power generation, and solid waste collection and disposal).
It’s self-funded and pays for its capital improvements by assessing taxes and fees to landowners and lessees, as well as issuing bonds.
Why did the State of Florida Take Action Against the Reedy Creek Improvement District?
When Florida Governor Ron DeSantis signed the bill ending (as of June 1, 2023) the Reedy Creek Improvement District, he stated it was about ending special districts’ privileges. He was critical of Disney’s opposition to the state’s Parental Rights in Education law, popularly known as the “don’t say gay” law, according to WESH.
“You’re a corporation based in Burbank, California, and you’re gonna marshal your economic might to attack the parents in my state. We view that as a provocation, but we’re gonna fight back.”
The law didn’t end all special improvement districts in Florida, so the state decided that some should keep their privileges while others could not. According to the Governor’s words, Disney’s criticism of the law was a “provocation” and the change was the response.
Before signing the law concerning Reedy Creek, Disney stated it would work to end the Parental Rights in Education law, either by repealing it through the legislature or by a legal challenge. In response, Gov. DeSantis is quoted by Fox Business as stating, “…for them to say they’re going to actively work to repeal substantive protections for parents as a company that is supposedly marketing its services to parents with young children — I think they crossed the line.”
Disney’s opposition to a law, according to Florida’s Governor, “crossed the line” and was a “provocation,” so Florida’s state government had to “fight back.”
What’s the Basis for Our Right to Free Speech?
The US Constitution’s First Amendment states:
“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”
Congress wasn’t involved in the decision. The Florida legislature passed the measure, which was signed into law by the state’s Governor. Does the First Amendment apply to actions by the Florida Government? Yes, thanks to the 14th Amendment, which states:
“All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States…”
The Third Amendment, which covers the free expression of religion, also only mentions Congress.
Does Disney Have a Right to Free Speech?
The Supreme Court’s decision in the Citizens United v. FTC states that First Amendment rights include the ability of corporations to make political speech without government control or retaliation, saying corporations have protections that come with citizenship.
The court in Citizens United stated, “…the First Amendment stands
against attempts to disfavor certain
subjects or viewpoints…The First Amendment protects speech and speaker, and the
ideas that flow from each.”
The court cited about a dozen prior cases that held corporations had Constitutionally protected free speech rights, including political speech. ‘Under the rationale of these precedents, political speech does not lose First Amendment protection “simply because its source is a corporation.”’
The case cites a few cases showing that, “Laws enacted to control or suppress speech may operate at different points in the speech process.” This includes “…seeking to exact a cost after the speech occurs…”
Listed in the decision is New York Times Co. v. Sullivan. At issue was a libel lawsuit brought under Alabama law. The court found allowing punishment for someone’s political speech by inflicting a financial penalty (money damages permitted by civil law) would be just as unconstitutional as a criminal law prohibiting the speech.
“What a State may not constitutionally bring about by means of a criminal statute is likewise beyond the reach of its civil law of libel. The fear of damage awards under a rule such as that invoked by the Alabama courts here may be markedly more inhibiting than the fear of prosecution under a criminal statute.”
Disney has as much of a right to free speech as you or I do. The Constitution prohibits government retaliation against a corporation or person for their speech, including imposing financial costs after it’s made.
Were Disney’s First Amendment Rights Violated?
We don’t know yet because it’s not clear if this new law will end Reedy Creek and, if it does, whether it will cause Disney financial harm.
Reedy Creek bondholders may file legal action to prevent changes from taking place. According to Disney, the original legislation creating the district included a promise to them the state would not limit or alter the district’s right:
- To own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects or to levy and collect the taxes, assessments, rentals, rates, fees, tolls, fares, and other charges
- To fulfill the terms of any agreement made with the holders of any bonds or other obligations of the District
The state also promised it would not impair the rights or remedies of the bondholders. If ending the Reedy Creek district impairs its right to contract with bondholders, a court may step in and prevent it from happening. If the state puts an end to the district, its rights and ability to do anything ends too.
The law states the district will cease to exist in a year but leaves the door open to continuing in some form in the future. If that happens, it would be easier to calculate how that new district would increase Disney’s costs or decrease its income. If the Governor boasts they’ve made Disney suffer somehow, he’ll fill in a critical blank in Disney’s lawsuit.
The bill ending Reedy Creek was introduced in the legislature and signed into law within days. There were no committee hearings nor much debate on the matter before the legislature voted on the issue, so there’s no expert opinion on how much the measure will cost Disney.
Disney’s stock value’s decreased, but given how diversified Disney is, it would be hard to establish whether Florida’s action is a factor and, if so, how much.
Potentially the end of Reedy Creek may save Disney money. Disney claims Florida’s Uniform Special District Accountability Act states that Reedy Creek’s dissolution would transfer its property to the local “general purpose” government, which would assume responsibility for its debt. Some estimate that about $1 billion in debt that Disney would’ve paid through the district instead would be the responsibility of Osceola and Orange County residents. This may increase their tax bills by as much as 25%.
The Devil is in the Details
Reedy Creek states it’s doing business as usual. Without showing harm (which Disney may have determined, but not made public) I don’t think it has a First Amendment claim. What do you think?
Image by HenningE