Judge Issues Painful Ruling Against Target as Shareholder Lawsuit for 2023 ‘Pride’ Campaign Threatens Woke Co.
A legal case involving Target has advanced after a Florida judge,John Badalamenti,ruled that a lawsuit filed by America First Legal can proceed. The lawsuit claims that Target’s emphasis on promoting Pride Month items led to important financial losses, totaling over $25 billion in market capitalization. The plaintiffs argue that Target’s board did not adequately assess the risks associated with its marketing strategies during the controversial 2023 Pride campaign.Key allegations include that the board misrepresented data in their proxy statements, which facilitated their re-election despite the controversies. Testimonies suggest that decisions were deliberately made to promote the Pride campaign, even at the risk of alienating some customers. The ruling signals a potential warning to other corporations regarding the management of social and political issues and how they disclose related market risks. Target also faced a setback when the judge denied its attempt to move the case to Minnesota, emphasizing that many of its directors and employees are based elsewhere.
A legal effort by Target to dismiss a lawsuit linked to its 2023 effort to put Pride before profits has been swatted aside.
A U.S. District Court Judge John Badalamenti in Florida ruled Tuesday that the lawsuit filed by America First Legal should proceed, according to USA Today.
The core of the lawsuit is that Target holders were damaged because during the years that led up to the 2023 debacle when Target was boycotted over its aggressive promotion of Pride Month items, Target’s board neglected to consider any risks associated with its heavy emphasis on Pride items that led Target to lose more than $25 billion in market capitalization.
“Plaintiffs have pleaded that the 2022 and 2023 proxy statements contained misrepresentation or omissions that resulted in the re-election of the Board, rejection of holder proposals, and compensation approval. Plaintiffs allege that those events caused a harm––i.e. the lack of oversight of social and political issues and risks,” the ruling against Target said.
Target’s bid to toss holder lawsuit over Pride backlash rejected by judge https://t.co/YLeBV2QUWv pic.twitter.com/nEVmkR2n5o
— New York Post (@nypost) December 4, 2024
“Plaintiffs allege that the lack of oversight contributed to the ‘preparation of the 2023 LGBT-Pride Campaign and failing to oversee social and political issues and risks preceded and continued after their election to the Board at the 2022 Annual Meeting.’ This is sufficient to allege a direct harm from the transactions,” the ruling said.
The ruling noted that “a confidential witness, who held a senior marketing position at Target, observed the ‘senior executives’ decisions to undertake the 2023 LGBT-Pride Campaign and make it more prominent were deliberate, explaining that nothing was spontaneously decided on, and everything was thought through.’”
“Further, the witness states that Target’s corporate ‘mantra now’ was to ‘stick [its] nose so far out. . . even at the risk of alienating certain customers’ and ‘without thinking [if the campaign went] too far,’” the ruling said.
A news release posted on the website of America First Legal said that the lawsuit “alleged that Target embraced a radical transgender agenda targeting children and families through the corporation’s infamous 2023 ‘Pride’ campaign.
“AFL’s lawsuit further alleged that the backlash to Target’s 2023 Pride Campaign led to billions in losses,” the release said.
Reed D. Rubinstein, America First Legal Senior Vice President, said the lawsuit goes beyond one company.
“Today’s decision is a warning to publicly traded corporations’ boards and management,” he said.
“Our federal securities laws mandate fair and honest disclosure of the market risk created by management when it uses holder resources, including consumer goodwill, to advance idiosyncratic and extreme social or political preferences,” he said.
“A lawsuit against Target over its controversial 2023 Pride Collection can move forward, a Florida judge has ruled…
‘Target embraced a radical transgender agenda targeting children and families through the corporation’s infamous 2023 “Pride” campaign,’ conservative group… pic.twitter.com/m23mdUOX8K
— America First Legal (@America1stLegal) December 6, 2024
“The risk of ESG mandates and DEI initiatives, such as Target’s ‘Pride Month’ that targeted young children, cannot be whitewashed with boilerplate language or ignored,” he said.
The news release noted that Target also lost its effort to shift the case to Minnesota, where Target is headquartered.
“In denying Target’s motion to transfer, the Court noted that many of Target’s directors live outside of Minnesota and most of its corporate employees are required to come into the office once per quarter, implying that many of them work remotely. Furthermore, Target’s 2020, 2021, 2022, and 2023 holder meetings did not occur in Minnesota,” the news release said.
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