Disney OKs historic $233M wage and hour settlement

A $233 million settlement between the Walt Disney Company and a class of 50,000 current and former Anaheim resort and theme park workers is set for approval following five years of litigation. The settlement, which fully compensates the class, resolves a dispute over Anaheim's living wage ordinance, known as "Measure L." According to the plaintiffs' counsel, it is the largest settlement of its kind in California history.

"Plaintiffs have obtained in settlement an amount that will make the entire plaintiff class whole, with 10% interest, as well as provide them with significant penalties," read the motion for preliminary approval filed on Friday.

"While plaintiffs firmly believe in the strength of their case on penalties, they are mindful of the risks in proceeding to a trial on penalties, and the delay that a trial on penalties would entail. On balance, these factors weigh strongly in favor of the settlement," the motion continued. Grace et al. v. The Walt Disney Company et al., 30-2019-01116850-CU-OE-CXC (O.C. Super. Ct., filed Dec. 6, 2019).

The plaintiffs were represented by Randall R. Renick and Cornelia H. Dai of Hadsell Stormer Renick & Dai LLP in Pasadena, as well as Richard G. McCracken and Sarah T. Grossman-Swenson of McCracken Stemerman & Holsberry, LLP in Oakland.

"Our clients are thrilled with the settlement and so proud to have fought for their Disney co-workers for the five years of class action litigation," Dai said in an email on Tuesday. "Through smiles and tears, all three named plaintiffs expressed the significant impact the back wages would make for themselves and so many of their co-workers."

Renick agreed in a phone call on Tuesday, noting that the settlement is the largest wage and hour settlement in state history.

"I think it's great news for Disney workers in Anaheim," Renick said. "I think the $233 million settlement will greatly impact and improve their lives and lives of their family."

The Walt Disney Company and related defendants are represented by Wilmer Cutler Pickering Hale & Dorr LLP attorneys David C. Marcus in Los Angeles and Alan Schoenfeld of New York City. They did not respond to emailed or phoned inquiries by press time on Tuesday.

In a statement Tuesday, Disneyland representative Suzi Brown said, "We are pleased that this matter is nearing resolution. Currently, all cast members make at least the Measure L requirement of $19.90 per hour, and, in fact, 95% of them make more."

The plaintiffs sued in 2019 claiming that Disney's Anaheim facilities had violated Anaheim's "Measure L," requiring that hospitality businesses who benefit from city subsidiaries pay their employees a minimum of $15 an hour effective Jan. 1, 2019.

"Disney defendants have not complied with the Living Wage Ordinance for plaintiffs and the plaintiff class despite being the recipient of massive subsidies from Anaheim in the form of tax rebates," an amended complaint filed last December read.

In a subsequent motion for summary judgment, Disney argued that a 1997 reimbursement agreement with the city to build parking did not constitute a subsidy agreement that would compel Disney to comply with Measure L.

"Plaintiffs rely on a collection of agreements between the Disney defendants and the City of Anaheim from the late 1990s ... which provided financing for the improved and revitalized Anaheim Resort District -- a project that was completed twenty years ago," the motion read.

"The agreements themselves grant no right to a tax rebate, as they must to be deemed a city subsidy -- which should end the matter," the motion continued.

The defense won summary judgment in November 2021. However, the 4th District Court of Appeal overruled the decision in July of 2023.

"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," the appeal court ruled. "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."

The parties reached the settlement in July after a full-day mediation session with former District Court Judge Layn Phillips, according to the motion for approval. Court dates for final approval of the settlement as well as attorney fees and costs are pending.