Target Faces DEI Lawsuit From State of Florida, AG Claims Retailer ‘Knowingly Misled and Defrauded’ Investors

Target’s troubles over its controversial 2023 Pride Month merchandise collection don’t appear to be over, as the retail giant now faces a lawsuit launched by Florida’s attorney general — in tandem with America First Legal — over concerns it may have intentionally misled its investors.

According to USA Today, Florida’s new AG, James Uthmeier, alleged in a class-action lawsuit filed on Feb. 20 that Target had “knowingly misled and defrauded” investors by concealing the risks related to its “radical LGBTQ activism.”

“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 press release. “My office will stridently pursue corporate reform so that companies get back to the business of doing business — not offensive political theatre. We appreciate America First Legal’s assistance in the fight to keep Florida’s investments safe.”

As CNN indicated, America First Legal was founded by White House Deputy Chief of Staff Stephen Miller, and the suit was brought on behalf of a Florida board responsible for the oversight of state investments and state pensions. This is the second lawsuit launched by America First Legal against Target regarding the backlash over the handling of its Pride Month collection, with the first remaining ongoing.

Debate Continues Over DEI and LGBTQ Causes and Relationship to Risk Concerns

The Pride Month merchandise collection in question included LGBTQ-positive messaging and affirmations on a wide variety of apparel items, and it included what USA Today deemed the most controversial item, a “tuck-friendly” swimsuit for trans women.

Public backlash over the collection led to a situation described as “volatile” by Target in a press release from 2023. CNN quoted Jason Schwartz, an attorney at Gibson Dunn, on the subject of the emerging lawsuits against DEI (diversity, equity, and inclusion) practices as they pertain to investors’ risk concerns.

“This is part of a new and growing trend of using securities lawsuits to attack corporate DEI programs, challenging whether risk disclosures were adequate. This kind of public-private partnership with state attorneys general will likely pave the way for others to follow,” Schwartz said.

Schwartz went on to say that this is a “very tough case to make.”

“Securities cases based on inadequate disclosures in general are difficult to prove, and here especially,” he added, gesturing toward the notion that cases based on social issues and the risks involved in invoking them are complex.

Target Foot Traffic Continues To Slow After DEI Pullback

And, as CNN noted, Target’s relative retreat from formal endorsement of DEI principles may have spurred something of a pushback from its established customer base, one which the news outlet described as more progressive than that of other companies — such as Walmart, Tractor Supply, and John Deere — that have also rolled back DEI policies.

While customer visits to Walmart, Costco, and Target have slowed over the past three weeks, according to data sourced from Placer.ai, CNN indicated that foot traffic had slowed most notably at Target.

During the week of Feb. 10 in particular, foot traffic fell by 3.9% at Target, per Placer.ai data, and 1.4% at Walmart. Meanwhile, Costco — which notably stood behind its DEI policies — enjoyed a 4.6% bump.

However, “Placer.ai said the slowdown could also be attributed to weather, economic conditions and other variables,” as CNN pointed out.