DeSantis, Disney, and the ‘Rule Against Perpetuities’

On March 29 2023, two popular posts on Reddit referenced a conflict between Disney and Florida Gov. Ron DeSantis (R), part of broader discourse involving a “rule against perpetuities.”

Background

In April 2022, we published a fact check about what was then a new conflict between Disney and Florida’s far-right governor, and we quoted a contemporaneous news item which mentioned the “Reedy Creek Improvement District”:

That era [of cooperation between Disney and Florida] ended on [April 21 2022], when the Florida House voted to revoke Disney World’s designation as a special tax district — a privilege that Disney has held for 55 years, effectively allowing the company to self-govern its 25,000-acre theme park complex. The Florida Senate voted on [April 20 2022] to eliminate the special zone, which is called the Reedy Creek Improvement District. Having cleared the way to this outcome with a formal proclamation, Gov. Ron DeSantis will almost certainly make the measure official by adding his signature. It would take effect in June [2023].

At the end of the page, we summarized the dispute:

Florida’s House and Senate voted on April 20 and 21 2022 to sanction Disney over its lack of support for Florida’s “Don’t Say Gay” bill (the Parental Rights in Education bill), by way of eliminating Disney’s tax status and tax district (Reddy Creek); in an email, Gov. DeSantis vowed not to allow “a woke corporation based in California to run” Florida. Orlando journalist Nick Papantonis published a lengthy Facebook post and article asserting that the bills created a huge tax burden for residents of Orange and Osceola counties. CNN also assessed the impact of the bill, reporting that the “debt service alone for Reddy Creek” cost “over a billion dollars.” Although the bill passed both houses and was likely to be signed into law by Republican governor Ron DeSantis, analysts indicated that the “72 hours of orchestrated revenge” harmed Florida’s residents more than Disney.

Social Media Discourse About DeSantis and Disney in March 2023

Posts to r/politics and r/PoliticalHumor reached r/all. The former mentioned “legal humiliation” in the title, and the latter featured a political cartoon (depicting DeSantis, Mickey Mouse, and a glue trap):

Florida-based journalist Mike DeForest published a thread to Twitter, identifying the parties involved in the first tweet:

DeForest’s fifth tweet in the thread mentioned language in a contract — the “rule against perpetuities.” Alongside a screenshot of what looked like a contract or agreement, DeForest stated that a “clause about King Charles III is absolutely real”:

The language in the screenshot referenced WDPR, “Walt Disney Parks and Resorts”; “RCID” referred to “Reedy Creek Improvement District.” A partial section with standard contractual language was visible at the top, and a clause under it read:

TERM: ASSIGNMENT BY WPDR

7.1    Term. This Declaration shall be deemed effective as of the Effective Date and continue to be effective in perpetuity unless all or certain portions of the provisions of this Declaration are expressly terminated as provided elsewhere herein; provided, however, that if the perpetual term of this Declaration is deemed to violate the “Rule Against Perpetuities,” or an similar law or rule, this Declaration shall continue in effect until twenty one (21) years after the death of the last survivor of the descendants of King Charles III, King of England living as of the date of this Declaration. Notwithstanding the foregoing or anything to the contrary herein, this Declaration will terminate as of the date that none of WDPR or any of its Affiliates (or their respective successor entities) owns any real property within ten (10) miles of the RCID Properties.

DeForest linked to a March 29 2023 article by WKMG-TV Orlando (“Disney made last-minute deal with former Reedy Creek board giving company wide powers, new board says”), which briefly outlined the development:

LAKE BUENA VISTA, Fla. – A meeting Wednesday [March 29 2023] morning of the Central Florida Tourism Oversight District board — which replaced the former Reedy Creek Improvement District — opened with members’ statements that there’s not much they’re actually allowed to do.

The board announced that a hired special council discovered agreements were made in February [2023] between Disney and Reedy Creek, weeks ahead of the signing of HB-9B, which handed over direct control of the district’s development rights and privileges to the company.

Board member Ron Peri said the group of five that Gov. Ron DeSantis appointed to take control of Disney’s “corporate kingdom” has very little power to govern.

“I cannot tell you the level of my disappointment in Disney. I thought so much better of them. This essentially makes Disney the government. This board loses, for practical purposes, the majority of its ability to do anything beyond maintain the roads and maintain basic infrastructure,” Peri said.

In the excerpt, “weeks ahead of the signing of HB-9B” was linked to a February 27 2023 WKMG-TV article with the headline, “‘Corporate Kingdom comes to an end:’ Florida Gov. DeSantis eliminates Disney control over special district,” which reported on what appeared to be the state’s successful exertion of control over Disney:

Control over Disney’s special district officially went to the hands of Florida as Gov. Ron DeSantis signed a bill renaming and remaking Reedy Creek.

The governor signed HB-9B during a news conference Monday [February 27 2023] at Reedy Creek Fire Station No. 4. The bill was approved during a special session[in January 2023] to give DeSantis full authority to appoint the district’s five-member Board of Supervisors and change the name to the Central Florida Tourism Oversight District.

“Since the 1960s. they’ve enjoyed privileges unlike any company or individual in the state of Florida has ever enjoyed. They, of course, control their own government right here in Central Florida. They had exemptions from laws that everybody else had to follow, and they were able to get huge amounts of benefits without paying their fair share of taxes and even racked up $700 million worth of municipal debt,” the governor said.

In short, it appeared that lawyers for Disney had quietly introduced a clause foiling DeSantis’ efforts to seize control of its financial interests.

‘Rule Against Perpetuities’

News about the newly-discovered contractual clause covered it in broad strokes (as in the excerpts above), alluding to legal maneuvering.

On March 30 2023, a Reddit account asked about the details of the dispute on r/OutOfTheLoop:

I keep reading Disney did some wild legal stuff to effectively cripple the committee DeSantis put in charge of Disney World, but every time I go to read one of the articles I get hit by “Not available in your region” (I’m EU).

Something about the clause referring to the last descendant of King Charles? It just sounds super bizarre and I’m dying to know what’s going on but I’m not a lawyer. I’m not even sure what sort of retaliation DeSantis hit Disney with, though I do know it was spurred by DeSantis’ Don’t Say Gay bills and other similar stances. Can I get a rundown of this?

Edit: Well hot damn, thanks everyone! I’m just home from work so I’ve only had a second to skim the answers, but I’m getting the impression that it’s layers of legal loopholes amounting to DeSantis fucking around and finding out. And now the actual legal part is making sense to me too, so cheers! Y’all’re heroes!

A comment at the top was “gilded” (meaning another account paid to give the commenter an award), and it attempted to address the original post in sections. One section addressed what Ron DeSantis “had to do with this,” and it read:

While it’s not official yet, it’s common knowledge that Florida Governor Ron DeSantis is planning on running for president in 2024. Likely as part of a strategy to draw national attention to himself, he’s supported a variety of policies to demonstrate that “Florida is where woke goes to die.” This includes multiple laws about schools, including the Florida Parental Rights in Education Act (a.k.a. the Don’t Say Gay law). Supporters of this law say it’s necessary to prohibit unnecessarily sexualized content being shown to kids and prevent sexual abuse. Opponents say it will contribute to bullying and discrimination against LGBT students.

Another section and a half pertained to developments in February and March 2023, and explained the maneuver in more detail. It also described “perpetuities” in contractual context as “contracts without an end date.”

In other words, the commenter claimed that a “rule against perpetuities” referred to “contracts without an end date,” which would otherwise be in effect forever — or “in perpetuity.” As such, a “rule against perpetuities” could conceivably be addressed by drafting a clause that was not “in perpetuity” in a purely technical way:

As it turns out, on February 8th [2023], the day before Florida passed the bill to put DeSantis’ allies in charge of the district, the district’s Board of Supervisors passed a “poison pill” rule. This rule agreed to give most of the district’s authority directly to the Disney Company. Consequently, even though DeSantis’ allies are officially taking over the local government, Disney still keeps almost all of the powers it had in the first place. In other words, Disney found a sneaky trick to effectively avoid DeSantis’ retribution.

It should be noted that some people have contended that this rule change can be challenged in court, but I don’t know enough about contract law to know who’s likely to win.

What does King Charles have to do with this?

There are some legal limitations on perpetuities (contracts without an end date). Consequently, the “poison pill” says that if part of the rule is unenforceable because of a prohibition on perpetuities, the end date of that part shall be “twenty one (21) years after the death of the last survivor of the descendants of King Charles III, King of England living as of the date of this Declaration.” It’s basically an F.U. to Florida’s leaders which could extend the length of the committee’s rule in place for a long time …

The ensuing discussion further analyzed the legal concept of a “rule against perpetuities.” An entry on Cornell Law School’s Legal Information Institute (LII), “Rule Against Perpetuities,” defined the concept concisely and comprehensively — but indicated that the rule was “virtually impossible to decipher”:

A common law property rule that states that no interest in land is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest. Because the meaning of this rule is virtually impossible to decipher, many states have modified it, and some have abolished it altogether.

A separate LII entry defined “vest” in the context of contracts and property law:

A right or an interest in property “vests” when it is secured. This means that the beneficiary of the right or property interest is certain to receive a specific amount, either now or in the future.

A March 30 2023 Orlando Sentinel article about the clause added some context to the legal jargon, and defined the term stipulated in the “King Charles III” clause:

… covenants must be tied to the lifespan of a person living at the time the covenant is signed, plus 21 years.

This rule gave rise to what’s known as the “Royal lives clause” — this is where King Charles III gets dragged into the Disney vs. DeSantis dispute — which is meant to extend a covenant as long as possible by tying it to the lineage of a member of a royal family.

According to the U.K. law firm Birketts, royals came to be used in such clauses because, given their wealth, they tended to live longer than most and their family trees were relatively easy to map … The clause addresses King Charles III’s living descendants at the time of the agreement, which not only includes his sons, Prince William and Prince Harry, but their children: Prince George, 9; Princess Charlotte, 7; Prince Louis, 4; Prince Archie, 3; and Princess Lilibet, 1.

On March 29 2023, the same news organization published “DeSantis’ Reedy Creek board says Disney stripped its power,” featuring statements by an irate board member and Disney in its reporting:

“We’re going to have to deal with it and correct it,” board member Brian Aungst Jr. said. “It’s a subversion of the will of the voters and the Legislature and the governor. It completely circumvents the authority of this board to govern.”

Disney defended its actions.

“All agreements signed between Disney and the district were appropriate and were discussed and approved in open, noticed public forums in compliance with Florida’s Government in the Sunshine law,” an unsigned company statement read.

Summary

On March 29 2023, “rule against perpetuities” appeared among Twitter’s trending topics regarding the newest development in a long-standing dispute between Disney and Florida Governor Ron DeSantis (R). In February 2023, DeSantis signed a bill and pledged to diminish Disney’s influence in the state. During a March 29 2023 board meeting, the Central Florida Tourism Oversight District board (formerly Reedy Creek Improvement District) members of the board admitted a “King Charles III” clause (related to the “rule against perpetuities” concept in contract and property law) effectively removed “for practical purposes, the majority of its ability to do anything beyond maintain the roads and maintain basic infrastructure.”