New Florida Attorney General takes aim at Target over DEI initiatives

TALLAHASSEE, Fla. - Florida Attorney General James Uthmeier has filed a class-action lawsuit against Target, alleging the company misled investors about the risks of its 2023 Pride campaign.

Target claims it warned investors of risk

What we know:

Three days into his tenure as Florida attorney general, James Uthmeier announced a class-action lawsuit against Target Corp., alleging the company misled investors about the financial risks of its 2023 LGBTQ Pride campaign.

The lawsuit, filed on behalf of the State Board of Administration, claims that Target’s stock value plummeted after consumer backlash and boycotts, leading to billions in losses. The case, filed in federal court in Fort Myers, is one of at least three similar lawsuits against the retailer in Florida.

The lawsuit names Target, CEO Brian Cornell, and its Board of Directors as defendants, accusing them of violating the Securities Exchange Act of 1934 by failing to disclose the risks of their Environmental, Social, and Governance (ESG) and Diversity, Equity, and Inclusion (DEI) initiatives. It seeks to include all investors who purchased Target stock between March 9, 2022, and Aug. 16, 2023.

Uthmeier was joined in filing the lawsuit by attorneys from the group America First Legal and the firms Boyden Gray PLLC and Lawson Huck Gonzalez, PLLC.

What we don't know:

It remains unclear how the lawsuit will play out in court and whether Target will settle or fight the allegations. The financial impact on investors, beyond the drop in stock price, has not been fully detailed. It is also unknown whether other states or investment groups will join similar legal efforts against Target or other companies with ESG-focused DEI policies.

The exact damages being sought by the State Board of Administration have not been specified, nor has there been a clear statement on whether this case could set a precedent for future lawsuits against corporations engaging in social advocacy.

The backstory:

The controversy began with Target’s 2023 Pride campaign, which included merchandise that drew criticism from conservative groups and sparked boycotts.

As backlash grew, the company made some adjustments, such as removing certain items from stores, but that did little to quell consumer discontent. Target’s stock suffered its longest losing streak in more than two decades, prompting claims that the company’s leadership failed to warn investors about the financial risks of its marketing decisions, the lawsuit alleges.

The legal push against Target aligns with broader efforts by conservative policymakers, including Florida Gov. Ron DeSantis, to challenge corporate involvement in social and political causes. Uthmeier, who previously served as DeSantis’ chief of staff, has signaled that holding corporations accountable for their ESG and DEI policies will be a focus of his tenure as attorney general.

What they're saying:

Uthmeier framed the lawsuit as a fight for financial responsibility.

"Corporations that push radical leftist ideology at the expense of financial returns jeopardize the retirement security of Florida’s first responders and teachers," Uthmeier said in a prepared statement. "My office will stridently pursue corporate reform so that companies get back to the business of doing business — not offensive political theatre."

"Target misled and defrauded its investors, destroying billions in shareholder value to serve its management’s corrosive, radical, and deeply destructive social agenda. America First Legal is proud to continue this fight with our co-counsel Lawson Huck and Boyden Gray. We would like to thank Attorney General James Uthmeier for his leadership in bringing Florida into this fight to protect Florida’s hard-working citizens from abuse and financial loss at the hands of woke corporate elites," said America First Legal Senior Vice President Reed D. Rubinstein.

"When Target went all-in on DEI, shareholders paid the price. With our co-counsel America First Legal and Lawson Huck Gonzalez PLLC, we intend to help every possible person harmed by Target’s choice to put politics over business," said Jonathan Berry, Managing Partner of Boyden Gray PLLC.

Target, however, has denied wrongdoing. In a previous court filing in another Florida case, the company argued that it "repeatedly warned investors of the risk" of consumer backlash related to its Pride initiatives.

Target’s legal team dismissed the claims as an attempt to litigate "business judgment," stating that merely disagreeing with corporate decisions does not constitute a valid securities fraud claim.

Big picture view:

The lawsuit is part of a broader national debate over corporate social responsibility and the financial consequences of businesses engaging in political or cultural issues. The case could have implications for how companies navigate ESG and DEI initiatives, particularly as Republican-led states continue to challenge corporate activism.

For investors, the case raises questions about the duty of corporate leaders to disclose potential financial risks tied to social advocacy. If the lawsuit succeeds, it could encourage more legal actions against companies that integrate social policies into their business strategies, potentially reshaping the balance between corporate governance and political engagement.

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