A class action lawsuit against Disneyland could be one step closer to answering a question many Anaheim residents and some council members have been debating for years.
Do Anaheim taxpayers subsidize Disneyland?
The lawsuit was filed against Disney in late 2019 for allegedly failing to follow Anaheim’s minimum wage law that city voters approved the year before.
Earlier this month, OC Superior Court Judge William D. Claster allowed the class action lawsuit against Disney to proceed.
“The judge agreed that it was an appropriate case for class certification, which sounds really dull, but it’s actually a big moment — it doesn’t happen often,” said attorney Randy Renick, who represents the resort employees.
The city law, known as Measure L, mandates that all businesses receiving a city subsidy must pay their workers a minimum wage of $17 an hour, which increases $1 per year.
The lawsuit alleges Disneyland is receiving a subsidy through the $510 million resort bonds issued in 1997, which helped build a parking garage and infrastructure improvements needed for California Adventure.
But, before Anaheim voters even went to the ballot box in November 2018, City Attorney Rob Fabela said Disneyland would be exempt from the law, in a report he issued.
“In summary, although there are many moving parts to the Bond Transaction, it does not appear to incorporate a direct City subsidy; that is, an agreement in which Disney is entitled to a “rebate of transient occupancy tax, sales tax, entertainment tax, property tax or other taxes, presently or in the future, matured or unmatured.” Therefore, it is the City Attorney’s opinion that Measure L would not apply to Disney by virtue of the Bond Transaction,” reads Fabela’s 2018 report.
That’s the cornerstone of Disneyland’s defense against the city’s minimum wage law.
“Disney has benefited for years from public monies from the City of Anaheim; yet it refuses to pay its employees the required living wage. This defiance of Measure L is furthering the very real struggles of its workers. Does this sound like the happiest workplace on earth?”
Attorney Randy Renick, who represents the resort employees, said in a news release this week
Renick, in a Thursday phone interview, said Claster essentially didn’t throw out the case like Disney wanted.
“So the judge has blessed our legal theory and approved it to go forward as a class action on behalf of 25,000 people,” Renick said.
Because of the nature of a class action lawsuit, it opens up the door for all Disneyland employees to file for damages, Renick said.
The lawsuit was originally filed by employees of a subcontractor inside the park and Disney employees.
“More than 25,000 Disney workers were not paid the living wage. That’s a lot of people Disney did not pay the living wage to,” he said, adding that he expects a jury trial sometime before next Summer.
Disney officials didn’t respond to requests for comment.
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The $510 million 1997 resort bonds helped build the $108 million Mickey and Friends parking garage, which Disney operates and keeps all revenue from. The bonds also paid for the $170 million Anaheim Convention Center expansion.
All of Disney’s incremental hotel, sales and property taxes — that would otherwise go to Anaheim — are used to pay down the bonds.
And 20% of all citywide hotel taxes go to the bonds.
Once the bonds are paid off, by 2037 or sooner, Anaheim will give the parking garage to Disney. It currently pays the city $1 a year to rent the garage.
The minimum wage law defines the term subsidy as “… any agreement with the city pursuant to which a person other than the city has a right to receive a rebate of transient occupancy tax, sales tax, entertainment tax, property tax or other taxes, presently or in the future, matured or unmatured.”
Leading up to the November 2018 election, Disney cancelled two major tax subsidy deals it had with the city — based, in part, on another legal analysis by Fabela that invalidated a large hotel subsidy because of confusion over the actual parcel that was eligible for a city subsidy.
[Read: Disney Wants to Cancel Its Anaheim Tax Subsidies, Calling Them ‘Divisive’]
The entertainment juggernaut cancelled a 700-room luxury hotel near Downtown Disney and the $267 million tax rebate that went along with it.
Disney also cancelled another agreement with Anaheim that provided a 30-year shield from any potential ticket tax on Disneyland by giving the money back to Disney, even if it was a voter initiative.
The 2015 agreement called for Disney to invest at least $1 billion in the resort district for the 30-year protection, with an additional $500 million investment that would’ve extended the tax protection for 15 years.
City officials have estimated Disney has already spent over $1 billion in the resort area.
Spencer Custodio is a Voice of OC staff reporter. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio