An Orange County Superior Court judge has rejected a lawsuit meant to compel Disney to comply with a living-wage ordinance approved by Anaheim voters.
Orange County Superior Court Judge William Claster on Monday issued a ruling granting a dismissal by Disney in a class-action lawsuit brought on behalf of employees claiming the company was not complying with Measure L, which was approved by voters three years ago.
Measure L requires that any hospitality company with 25 or more employees that receives a city subsidy must pay $15 an hour, with a $1 hourly increase each January through 2022. Once wages reach $18 an hour, pay would be tied to the cost of living. The ballot measure was backed by Unite Here Local 11, which represents hotel and restaurant workers at the resort, according to the Los Angeles Times.
The city issued a statement about the ruling affirming the judge’s decision against the voter-approved ordinance.
“While we never want to see a dispute like this play out in court, we appreciate the judge’s determination,” the statement says. “It validates what we already knew and have said: the city of Anaheim does not provide any rebate or subsidy to Disney.”
A Disneyland spokesperson told Deadline: “We have always been committed to fair and equitable pay for our cast members but have always agreed with the Anaheim City Attorney’s conclusion that Measure L does not apply to the Disneyland Resort. We are pleased the court has confirmed that position.”
In fact, Deadline reported at the time that the Anaheim City Council voted to end agreements that offer the Disneyland Resort tax breaks as Measure L gained steam in 2018. The council did so at the request of Disney and after the Los Angeles Times examined the cozy relationship between Anaheim and the entertainment giant, which reportedly resulted in more than $1 billion worth of subsidies, incentives, rebates and tax breaks over the past two decades.
Per the city’s statement today about the ruling:
“The Mickey & Friends parking structure and related financing were part of a $1.9 billion expansion of the Anaheim Resort from 1997 to 2001.
“The expansion was a public-private partnership reflecting mutual interest in Anaheim’s visitor economy. It has been a great return on investment for our city, residents and neighborhoods.
“Since the 1990s expansion, Anaheim’s hotel revenue has more than tripled to a pre-pandemic high of $163 million in 2019. That money has gone to public safety, community centers, libraries, parks and meeting city obligations.
“The pandemic drove home how important a strong visitor economy is for our city. With the year-plus closure of the parks and convention center, hotel revenue fell 85% over two years to about $25 million. That presented a real challenge for our city and the residents we serve.”
Disney parks swung to a loss a year ago due to the pandemic, but bounced back to an operating profit of $356 million in Q3 2021. Revenue in the Parks, Experiences and Products division more than quadrupled to $4.3 billion this year.
Judge Claster ruled that while Disney benefited from the agreement with the city, it did not technically receive a tax rebate.
Claster said, “Whether the Disney defendants received a ‘public subsidy’ in a general sense is a different question from whether they received or have a right to receive a city subsidy as defined, i.e., a rebate of taxes (in the form of a refund, abatement, exemption, etc.).”
The judge said the plaintiffs showed how the benefits were used to service bond debt, but “they identify no evidence suggesting that the finance agreement causes the Disney defendants to pay less in taxes (whether by post- payment refund, pre-payment exemption, etc.) than they would owe if no finance agreement were in place.”
In other words, the finance agreement with the city helped Disney defray all of its “debt service payments, not taxes,” Claster said.
“Had the Disney defendants raised construction funds privately, they would have had to make both tax payments and debt service payments,” Claster said. “The bond issuance here was structured so that they received a portion of the proceeds of the bond issuance, but only have to make tax payments in return. Their taxes go into the city’s general fund, and money from the general fund ultimately services the debt (after a series of transactions). This is a significant benefit to the Disney defendants, but, again, there is no evidence that the finance agreement somehow lessens their tax obligation. Therefore, the public benefit conferred on the Disney defendants by the finance agreement does not create a city subsidy.”
City News Service contributed to this report.
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