Judge denies DeSantis bid to disqualify him from Disney case, but recuses himself anyway because his relative owns company’s stock

A sign near an entrance to Walt Disney World on May 22, 2023 in Orlando, Florida.

Joe Raedle | Getty Images News | Getty Images

A federal judge overseeing Disney’s civil free speech lawsuit against Florida Gov. Ron DeSantis recused himself from the case Thursday, days after learning that one of his relatives owns stock in The Walt Disney Company.

The case will be taken over by Judge Allen Winsor, an appointee of former President Donald Trump, according to the court docket. Trump is running against DeSantis for the 2024 Republican presidential nomination.

Judge Mark Walker made the decision to remove himself from the case despite denying DeSantis’ motion for him to be disqualified. Attorneys for the governor and the other defendants had argued that Walker’s remarks in separate lawsuits drew questions about his impartiality in Disney’s case.

Walker, who was appointed to the bench by ex-President Barack Obama, in a court filing in United States District Court in Tallahassee, Florida called the governor’s argument “meritless.” But he nevertheless concluded in the same filing that he must disqualify himself “for reasons unrelated to Defendants’ meritless motion.”

Walker said he learned on Friday that “a relative within the third degree of relationship owns thirty shares of stock” in Disney’s parent corporation. The judge said he launched an inquiry into the matter and ultimately “determined that disqualification from this proceeding is required under the circumstances.”

While the judge did not identify the relative by name or relationship, third-degree relatives include great-grandparents, great grandchildren, great uncles and aunts as well as first cousins.

Shares of Disney closed at $88.59 on Thursday. Thirty shares at that price total about $2,658.

But Walker said that under the judicial code of conduct by which he is bound, “The size or dollar amount of the third-degree relative’s financial interest is irrelevant.”

Even if the relative owned just a single share of stock, the judicial code is “clear that the impact on the third-degree relative’s investment — not the amount of the investment — governs disqualification,” Walker wrote.

Disney’s allegations make clear that this case “involves significant economic interests for its parent corporation, in which my third-degree relative owns stock,” the judge wrote.

Disney alleges that DeSantis led a political retaliation campaign against the company after it publicly denounced the controversial classroom bill that critics have dubbed “Don’t Say Gay.” That retaliation, which includes DeSantis and his allies targeting Walt Disney World’s special tax district and its recent development deals, have threatened Disney’s business, the company alleged.

“Even though I believe it is highly unlikely that these proceedings will have a substantial effect on The Walt Disney Company, I choose to err on the side of caution — which, here, is also the side of judicial integrity — and disqualify myself,” Walker wrote.

“Maintaining public trust in the judiciary is paramount, perhaps now more than ever in the history of our Republic,” the judge wrote.

The development from Walker is the latest wrinkle in the lengthy feud between DeSantis and Disney, one of Florida’s top employers.

Weeks after Disney under then-CEO Bob Chapek came out against the classroom bill and vowed to help repeal it, the Republican-majority Florida Legislature in April 2022 voted to dissolve the special tax district that had allowed the company to effectively self-govern its Florida operations since the 1960s.

The district was ultimately left intact, but its board was replaced with members handpicked by DeSantis.

Disney filed suit after that board voted to nullify development deals the company had struck shortly before the new board took power. The board has countersued in state court. Disney has asked for that case to be dismissed.

Source – CNBC