Securities Regulation Daily Wrap Up, ESG NEWS—M.D. Fla.: Florida government sues Target over undisclosed ESG-DEI initiatives, (Feb 24, 2025)

By Jay Fishman, J.D.

This is third suit against Target over ESG and DEI.

In this third lawsuit brought against Target for securities fraud, the Florida State Board of Administration, represented by Florida Attorney General James Uthmeier and America First Legal (AFL), states that the company knowingly misled and defrauded investors by concealing the financial risks of Target’s alleged radical LGBTQ activism, costing shareholders tens of billions of dollars (State Board of Administration of Florida v. Target Corp., No. 2:25-cv-00135-SPC-NPM (M.D. Fla. Feb. 20, 2025)).

In the first case filed, Florida’s Middle District Court denied defendant Target’s motion to dismiss a shareholder’s complaint on finding that the company’s chief executive officer made material misstatements and omissions, acted with scienter, and directly caused Target stock to decline in violation of Exchange Act Section 10(b)/Rule 10b-5 and Section 14(a). Basically, the court disagreed with every argument Target made in its November 9, 2023 motion to dismiss, determining the plaintiff shareholder had a plausible case on all claims at this stage of the pleadings. This case remains pending (Craig v. Target Corporation, No. 2:23-cv-599-JLB-KCD (M.D. Fla. Dec. 4, 2024)). In the second case, Target found itself caught in the crossfire of investor lawsuit over LGBT Pride versus consumer boycotts over DEI reversal. Specifically, facing a wave of fierce anti-DEI backlash, Target has joined other companies in announcing it is cancelling its DEI initiatives. But following the DEI reversal, Target has received boycott threats—making DEI decisions in either direction financially risky (City of Riviera Beach Police Pension Fund v. Target Corp., No. 2-25-cv-00085-JLB-KCD (M.D. Fla. Jan. 31, 2025)).

Parties. The State Board of Administration of Florida brought the suit against Target Corporation and certain senior executives, including CEO Brian Cornell.

Jurisdiction. The suit is filed in U.S. district court in the Middle District of Florida, Fort Myers Division.

Facts. The complaint alleges that Target misled investors by making false and misleading statements about Target’s ESG and DEI mandates that led to widespread customer boycotts following Target’s 2023 LGBT-Pride campaign.

According to the complaint, negative effects of the 2023 Pride campaign along with a 2024 campaign on Target’s business led to a massive decline in Target’s stock price. Specifically, the complaint alleges that the 2023 LGBT Pride Campaign offended certain Target customers, provoking consumer backlash and boycotts that caused Target’s sales to fall for the first time in six years.

The complaint alleges that Cornell and Target’s board of directors did not oversee or disclose the known risks of Target’s 2023 LGBT-Pride Campaign and the 2024 Campaign. Through alleged misleading statements in public filings, this deceit caused Target’s investors to buy stock at artificially inflated prices and unknowingly support Target’s Board and management in their misuse of investor funds to serve political and social goals.

The complaint asserts that Target suffered tens of billions of losses in its market capitalization from May 2023 through the present as the truth of the negative effect of these campaigns came to light. For example, Target’s stock price allegedly suffered a decline of 22 percent in one day on November 20, 2024, wiping out $16 billion in market cap.

Claims. The complaint alleges violations of Sections 10(b), 14(a), and 20(a) of the Exchange Act and Rules 10b-5 and 14a-9.

Relief requested. The complaint seeks declaratory relief, permanent injunction, damages, expenses and costs.

Attorney general press release statement. In a press release, Florida’s Attorney General James Uthmeier said: “Corporations that push radical left ideology at the expense of financial returns jeopardize the retirement security of Florida’s first responders and teachers. My office will stridently pursue corporate reform so that companies get back to the business of doing business—not offensive political theater. We appreciate America First Legal’s assistance in the fight to keep Florida’s investments safe.”

This case is No. 2:25-cv-00135-SPC-NPM.

Attorneys: Jonathan Berry (Boyden Gray PLLC) for State Board of Administration of Florida.

Companies: Target Corp.

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