Subject under scrutiny by the conservative legal sphere due to repeated DEI controversies
This legal battle against retail giant Target was initiated by Florida Attorney General James Uthmeier, a Republican, alongside America First Legal, a group led by White House deputy chief of staff Stephen Miller, on behalf of a Florida board managing state investments.
The lawsuit marks a recent conservative attack on corporations aiming to promote diversity in various sectors, including employee representation and marketing. This legal action against Target follows its decision in late 2022 to abandon some diversity, equity, and inclusion (DEI) policies under pressure from conservative groups and former President Donald Trump's attempts to curb DEI in private-sector businesses using federal power.
On the left, Target's voluntary retreat from DEI has sparked criticism and calls for boycotts, even from civil rights groups and family members of one of Target's co-founders. They expect Target to continue championing diversity as a solid business practice, a stance the retailer held for years.
Interestingly, Target finds itself in a precarious situation, with both sides putting pressure on its DEI initiatives. Losing ground on either side could mean a loss for the company.
Target did not respond to CNN's request for comment on the lawsuit.
Pride Month 2023: Controversy and Backlash
The lawsuit's origins date back to Target's Pride Month 2023 merchandise, which attracted negative attention from conservative media figures.
That year, several viral posts on social media claimed that Target was selling "tuck-friendly" swimsuits designed for transgender customers to children. The Associated Press debunked these claims. However, the response was far from favorable, with aggressive threats towards Target employees and damaged products and displays in stores.
Target responded by removing certain controversial items to ensure employee safety, a move that frustrated supporters of LGBTQ+ rights, who felt that the company caved to bigoted pressure. Target reported a drop in quarterly sales during Pride Month 2023 for the first time in six years, only to recover in subsequent quarters.
This is the second lawsuit filed against Target by America First Legal alleging fraud related to the backlash against Pride Month 2023 merchandise. The first case is still ongoing.
Jason Schwartz, an attorney at Gibson Dunn, pointed out that bringing securities lawsuits to challenge corporate DEI programs is a challenging approach. Schwartz noted that demonstrating inadequate disclosures in such circumstances is arduous, especially when it comes to social issues.
The Blowback to Target's DEI Retreat
Although the lawsuit and Pride Month 2023 controversy started in 2023, recent events have revived interest in Target's DEI policies.
On January 24, 2021, during the early Trump administration, Target announced the elimination of hiring goals for minority employees, dismantling an executive committee focused on racial justice, and reevaluating its diversity initiatives.
The company then introduced a new strategy called "Belonging at the Bullseye," maintaining its commitment to promoting diversity and fostering a sense of belonging for employees and customers. However, no company has faced more backlash for its DEI policies than Target, thanks to its more progressive customer base. Significant cuts in DEI investment have attracted criticism and appear to be having an impact on customer visits.
Placer.ai, which uses phone location data to track store visits, reported a 3.9% drop in foot traffic at Target during the week of February 10, 2023. In contrast, Costco, which has maintained its DEI policies, saw a 4.6% rise in foot traffic during the same period.
- The recent lawsuit against Target, initiated by Florida Attorney General James Uthmeier and America First Legal, is targeting the retail giant for its DEI policies, particularly its support during Pride Month, which has been a source of controversy.
- Given the ongoing lawsuits, Republican politicians and conservative groups have been especially critical of Target's pension fund investments, alleging potential misuse of funds to promote diversity and inclusion initiatives.
- The blowback against Target's retreat from DEI policies has also extended to its financial health, with some pension funds threatening to divest from the company unless it reevaluates its stance on diversity and inclusion.
