Delaware Business Litigation Report

Chancery Denies Books and Records Request Related to Disney’s Opposition to Florida Legislation Prohibiting LGBTQ+ Topics in Classrooms

Simeone v. The Walt Disney Company, C.A. No. 2022-1120-LWW (Del. Ch. June 27, 2023)
The Walt Disney Company opposed Florida legislation that limits instruction on sexual orientation and gender identity in Florida classrooms. The Governor of Florida responded by threatening the revocation of tax-favorable treatment for Disney. The plaintiff filed a books and records demand and then litigation, alleging that Disney's opposition to the legislation put at risk Disney's tax-favorable treatment and that Disney's directors and officers may have breached their fiduciary duties by putting their own beliefs ahead of their obligations to stockholders.

The Court of Chancery concluded that the plaintiff had not demonstrated a proper purpose to inspect books and records. In his deposition, the plaintiff testified that his purpose was to identify the persons at Disney responsible for making a political decision with which he disagreed. The remainder of the lawsuit was lawyer-driven. Further, the plaintiff had not provided a credible basis from which to infer possible wrongdoing. Disney's opposition to the legislation was a business decision reached in the absence of any apparent disabling conflict, negligence, or bad faith and only after the board had deliberated regarding the company's response. Finally, even if the plaintiff had demonstrated a proper purpose, Disney had already produced to him the formal board-level materials essential to his stated purpose, including permitted redactions related to privilege and responsiveness. The plaintiff's efforts to obtain additional documentation, including emails and communications between board members, were overly broad and not essential to a proper purpose.

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