• by Tanya Gazdik , December 5, 2024

Target has failed to persuade a judge to dismiss a 2023 lawsuit revolving around its sales of LGBTQ-themed merchandise for Pride Month and an ensuing backlash and customer boycott.

U.S. District Judge John Badalamenti in Fort Myers, Florida ruled that the plaintiffs had presented enough information to pursue claims that Target misled investors about its efforts to guard against social and political risks. 

The court also denied the corporation’s request to move the case to Minnesota, where it is headquartered.

The plaintiff in the lawsuit is investor Brian Craig, a Florida resident who spent around $50,000 for Target stock in April 2022.

"By April 2023, the value of Craig’s holdings fell to $34,839, and then dropped to $28,896 by June 14 — in the middle of Pride Month, as Target was in the middle of a boycott, triggered by a collection that included children’s book titled ’Twas the Night Before Pride,’” according to the New York Post. 

“America First Legal filed the lawsuit against Target and its board of directors in August 2023, claiming the board had misled investors about the financial risks of its DEI practices,” according to HR Dive. “Specifically, the lawsuit alleged that Target’s 2023 Pride campaign tanked the brand’s profits and that Target failed to warn of the risk of ‘adverse reactions.’”

"The suit claims that Target's board focused only on activist groups' calls for diversity, equity and inclusion measures and overlooked potential negative responses to the Pride campaign in May 2023,” according to Reuters.

“America First and other conservative groups have accused some major US companies of undertaking diversity and inclusion efforts at the expense of shareholders,” per Reuters. “Target pulled some LGBTQ-themed merchandise linked to Pride Month last year, citing increased confrontations between shoppers and employees and incidents of products being thrown on the floor.”

Craig is seeking financial compensation for damages and for Target's 2023 directors’ election to be voided, according to Marketing Daily. 

America First Legal, the group founded by former Trump administration adviser Stephen Miller,  called the court ruling a "warning to publicly traded corporations’ boards and management.”

“The group said the risk of DEI programs and environmental, social, and governance (ESG) initiatives ‘cannot be whitewashed with boilerplate language or ignored.'” according to Reuters.