A three-judge panel from the Fourth Appellate District court ruled that Disney needs to follow Anaheim’s minimum wage law because it does in fact receive city subsidies.
That means Disneyland employees could soon see their minimum wage increase to nearly $20 an hour.
The court’s Thursday ruling shifts the tide in a long debated question in Anaheim:
Are taxpayers subsidizing the happiest place on earth – Disneyland?
The appellate court judges say yes.
They say Disneyland does in fact fall under a 2018 Anaheim law – dubbed Measure L – that requires resort district hospitality employers that receive city subsidies to pay workers higher wages.
The decision from the three-judge appellate panel stems from a 1996 resort district bonds agreement, which stipulated that Disney would cover bond payments if the city falls short. In turn, the city would repay Disney down the road.
“We find the Reimbursement Agreement gives Disney the right to receive a rebate—or a return—of transient occupancy taxes (paid by hotel guests), sales taxes (paid by consumers), and property taxes (paid by Disney), in any rebound years when the City’s tax revenues are sufficient to meet its bond obligations. Consequently, Disney receives a “City Subsidy” within the meaning of the [living wage ordinance] and it is therefore obligated to pay its employees the designated minimum wages,” reads the ruling.
Workers in the Anaheim resort district at taxpayer-subsidized businesses are required to be paid nearly $20 an hour under Measure L.
The ruling means thousands of Disneyland park employees, resort area hotel employees and food service workers are entitled to wages previously denied to them.
“Disney’s resistance has been based on the most hypertechnical legalisms about whether it had an agreement with the City for a rebate of its taxes,” said Richard McCraken, a lawyer representing plaintiffs in the lawsuit, in a Thursday news release.
“The Court found that Disney’s entitlement to a rebate is clear. Now the only question is how much longer Disney will string this out in order to avoid paying its employees what the law requires,” McCracken said.
Disneyland spokespeople did not return requests for comment Thursday.
Thursday’s ruling comes in a town where Disney heavily finances city council campaigns through its chief local elections spending vehicle, Support Our Anaheim Resort.
From there, SOAR heavily boosts council campaigns through independent expenditures on things like political mailers, digital advertising and polling services.
[Read: Disney’s PAC Continues Spending Big To Sway Voters in Anaheim]
Last year, FBI agents in sworn affidavits alleged resort interests through the Anaheim Chamber of Commerce held outsized influence over city hall.
[Read: FBI Reveals What Many Anaheim Residents Felt For Years, City Hall is Run By The Chamber of Commerce]
Disney and the Chamber heavily pushed back against the Measure L campaign in 2018.
A coalition of unions supported the minimum wage ordinance that year through a signature gathering and public outreach campaign.
Their 2018 efforts also drew presidential hopeful, Sen. Bernie Sanders to back Measure L.
[Read: Bernie Sanders Joins Roundtable with Disneyland Workers]
Roughly two months ahead of the November 2018 election, Disney asked Anaheim to cancel city subsidies, which also killed the development of a 700-bed luxury hotel.
At the time, Disney officials said they wanted to reset the relationship on a “flashpoint for controversy” over the subsidies.
[Read: Anaheim Ends Tax Subsidy Deals for Disneyland]
But more than 45,000 Anaheim voters decided in favor of the minimum wage ordinance.
While the measure faced strong opposition by resort interests, residents approved the initiative by 54% to 46% in the 2018 November election.
Since then Disneyland refused to comply with the law, arguing that a rebate wasn’t a subsidy.
City officials at the time agreed.
[Read: Anaheim City Attorney Says Disney Exempt From $15 an Hour Wage Initiative]
The appeals court judges didn’t.
“In short, we hold Disney receives a “City Subsidy” within the meaning of the LWO (living wage ordinance) and is therefore required to pay its employees a living wage. Thus, we reverse the trial court’s order granting the defendants’ motion for summary judgment,” reads the ruling.
In 2019, employees filed a class action lawsuit against the company alleging Disneyland is receiving a subsidy from the city through the 1997 resort bonds which helped build the Mickey and Friends parking garage and improvements to the California Adventure side of the park.
Disney operates and leases the city owned parking garage for $1 a year while keeping all the revenue generated from it.
In 2021, an OC Superior Court Judge William Claster ruled in favor of Disney – stating that while the company benefited from the bonds it didn’t amount to a subsidy.
[Read: Disneyland Workers Plan to Appeal OC Judge’s Ruling Against Their Class Action Wage Lawsuit]
So workers filed an appeal and won.
“We are thrilled by the Court’s decision and hope Disney will stop fighting against paying its workers a living wage,” said plaintiff Regina Delgado, a former employee of the Plaza Inn resort area hotel, in a Thursday news release.
The victory comes as unionized hotel workers at the Anaheim Hilton and Sheraton Park in the resort area walked out this week as part of rolling strikes for better pay.
[Read: On Strike: Orange County Hotel Workers Picket For Better Pay]
Ada Briceño, co-president of Unite Here Local 11 – the union representing hotel workers in Southern California, said in a Thursday phone interview that she is thrilled by the court’s decision.
“We believe that workers should have the right to live where they work, especially those who make Disneyland or the surrounding hotels profitable,” she said.
Briceño added that strikes will continue tomorrow at the Anaheim Hilton with workers expected to rally and march down Harbor Boulevard at 10 a.m.
The walkouts in Anaheim came after city council members – many who had their campaigns heavily financed by resort interests – called for a $1.6 million special election to vote on a ballot measure, proposed by Unite Here, that would bump the minimum wage for hotel workers to $25 an hour in the city.
Resort interests and city officials have made similar arguments against the $25 minimum wage measure as they did to Measure L.
Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.
Spencer Custodio is the civic editor. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.
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