America First Legal challenges Disney's DEI programs, alleging breaches of fiduciary duty and federal civil rights violations

American First Legal (AFL) has sent a demand letter to Disney's CEO, Bob Iger, along with the Board of Directors and management team, alleging breaches of fiduciary duty and violations of federal civil rights laws. The letter highlights concerns over Disney's diversity, equity, and inclusion (DEI) programs, which the group claims have led to a significant drop in the company's value.

AFL, the legal advocacy group headed by former Donald Trump advisor Stephen Miller, argued in its letter that Disney's implementation of DEI programs is deemed "facially illegal," with the Board and management being accused of pursuing a politically motivated agenda that jeopardizes the company's reputation and goodwill. 

“The evidence is that Disney’s Board and management team are sacrificing the Company’s reputation and goodwill to serve a highly idiosyncratic and controversial political agenda that is offensive to the vast majority of the Company’s core customers.” the letter reads. “This conduct, which is motivated by something other than the best interest of the Company’s shareholders, lacks a rational business purpose.”

The legal challenge comes in the wake of revelations made by American First Legal in February regarding Disney's alleged use of race and sex quotas in its hiring practices. The legal group filed a federal civil rights complaint with the US Equal Employment Opportunity Commission, citing public documents and internal memos as evidence of discriminatory hiring practices.

Specifically, the complaint alleges that Disney imposes hiring quotas, requiring at least 50 percent of a hiring group to be members of an "unrepresented group" for various positions, both on and behind the camera. This policy reportedly extends to characters on screen, actors, as well as the overall crew and staff involved in Disney General Entertainment productions.

AFL argues that considering racial, ethnic, and sex-based characteristics in hiring, training, compensation, and promotion is “patently unlawful” and constitutes a violation of federal civil rights laws. The group contends that Disney's documented plans to implement such policies demonstrate an intentional disregard for these laws.

The legal group argues that these actions have led to a dramatic reduction in the company’s market capitalization. In February 2021, Disney’s market cap was approximately $341 billion. Today, it is roughly $207 billion, a decrease of almost 40 percent. Because of this, AFL contends that Disney’s management did not adequately disclose to shareholders the financial risk that was created when the company decided to implement a radical, woke culture into its content. 

“Disney has displayed an inexplicable disregard for its customers and shareholders, forcing radical gender-expansive, anti-White, and anti-police content on families while providing warnings about harmful content on uncontroversial content,” the legal group stated.