A class action lawsuit against Disneyland could get one step closer to answering a question many Anaheim residents and some councilors have debated for years.
Are Anaheim Taxpayers Subsidizing Disneyland?
The lawsuit was filed against Disney in late 2019 for allegedly failing to comply with Anaheim’s Minimum Wage Act, which the city’s voters approved the previous year.
Earlier this month, OC Superior Court Judge William D. Claster approved the continuation of the class action lawsuit against Disney.
“The judge agreed that this was a fair case for class certification, which sounds really boring, but it’s actually a big moment – it doesn’t happen often,” said attorney Randy Renick, who represents the resort’s staff.
City law, known as Measure L, requires all companies that receive a city subsidy to pay their workers a minimum wage of $ 17 an hour, increased by $ 1 a year.
The lawsuit alleges that Disneyland is receiving a $ 510 million subsidy from its 1997 resort bonds that helped build a parking garage and improve infrastructure for California Adventure.
But before Anaheim voters even went to the ballot box in November 2018, City Attorney Rob Fabela said in a report he published that Disneyland was exempt from the law.
“In summary, it can be said that while the bond transaction contains many moving parts, it does not contain any direct city subsidy; that is, an agreement under which Disney is entitled to a “discount on temporary use tax, sales tax, entertainment tax, property tax, or other tax, present or future, due or not due”. As a result, prosecutors believe that Measure L would not apply to Disney due to the bond transaction, ”Fabela’s 2018 report stated.
This is the cornerstone of Disneyland’s defense against the city’s minimum wage law.
“Disney has benefited from Anaheim City public funds for years; nevertheless, she refuses to pay her employees the necessary living wages. This disregard of Measure L encourages the very real struggles of their workers. Does that sound like the happiest job in the world? “
Attorney Randy Renick, who represents the resort’s employees, said in a press release this week
Renick said in a phone interview Thursday that Claster essentially didn’t throw away the case as Disney wanted.
“So the judge has blessed our legal theory and approved it to be filed as a class action lawsuit on behalf of 25,000 people,” Renick said.
Due to the nature of a class action lawsuit, it opens the door for all Disneyland employees to file damages, Renick said.
The lawsuit was originally filed by employees of a subcontractor at the park and Disney employees.
“More than 25,000 Disney employees were not paid a living wage. That’s a lot of people Disney didn’t pay their living wages, ”he said, adding that he is expecting a jury trial sometime before next summer.
Disney officials did not respond to requests for comment.
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The $ 510 million resort bonds from 1997 helped build the $ 108 million Mickey and Friends parking garage, which Disney operates and from which Disney retains all revenues. The bonds also paid for the $ 170 million expansion of the Anaheim Convention Center.
Any additional Disney hotel, sales, and property taxes – which would otherwise go to Anaheim – will be used to pay off the bonds.
And 20% of all city-wide hotel taxes go to the bonds.
Once the bonds are paid off, by 2037 or earlier, Anaheim will hand over the parking garage to Disney. Currently, the city pays $ 1 a year to rent the garage.
The Minimum Wage Act defines the term subsidy as “… any agreement with the city according to which a person other than the city is entitled to a reduction in temporary residence tax, sales tax, entertainment tax, property tax or other taxes, or in the future, matured or unmatured . ”
In the run-up to the November 2018 election, Disney canceled two large tax subsidy deals with the city – based in part on another legal analysis by Fabela that a large hotel subsidy was due due to confusion over the actual package that went for a a. was entitled to invalidated municipal grant.
[Read: Disney Wants to Cancel Its Anaheim Tax Subsidies, Calling Them ‘Divisive’]
The entertainment giant has canceled a 700-room luxury hotel near downtown Disney and the associated tax break of $ 267 million.
Disney also announced another deal with Anaheim that offered 30 years of protection from a possible ticket tax at Disneyland by returning the money to Disney, even if it was a voter initiative.
The 2015 agreement saw Disney invest at least $ 1 billion in the resort district for 30-year protection, with an additional investment of $ 500 million that would have extended tax protection by 15 years.
The city government has estimated that Disney has already invested over $ 1 billion in the resort area.
Spencer Custodio is a contributor to Voice of OC. You can reach him at [email protected]. Follow him on Twitter @SpencerCustodio