The Pooh Papers
DISNEY-POOH SETTLEMENT TALKS BREAK DOWN by Joe Shea
by Joe Shea
American Reporter Correspondent
HOLLYWOOD, April 16, 2002 -- Eight months of settlement talks in the 11-year legal battle between the Walt Disney Co. and Stephen Slesinger, Inc., over royalties from Winnie the Pooh have irretrievably broken down, Hollywood superlawyer Bert Fields told the Los Angeles Superior Court Monday in a faxed letter, The American Reporter has learned.
A Dept. 54 court clerk confirmed receipt of the fax Monday afternoon. "We did receive a fax. I can't tell you what's in it," the clerk said. The letter, according to a source whose statements about the case have always proved accurate in the past, says the two adversaries are "too far apart" to resolve their differences out of court. Disney has claimed it owes nothing to the Slesinger firm, while the Slesingers say it is due some $30 million. [In new developments, attornies for Slesinger today hotly denied that any such letter existed, while attorneys observing the case said there is a letter from Fields but that it does not say talks are stalled. The American Reporter stands by its original report.]
[The American Reporter learned Wednesday that after receipt of the letter, Superior Court Judge Ernest M. Hiroshige in an ex parte proceeding Tuesday ordered Fields and Disney lawyer Daniel Petrocelli to confer with him on Friday, April 19.]
A trial on other disputed rights for which the Slesingers say they are owed some $200 million is set for next year.
The settlement talks stemmed from a four-day "accounting reference" last August in which the plaintiffs sought back royalties on theme park and other sales of Pooh merchandise over which there is otherwise no dispute. At the end of the hearing, both Fields and Petrocelli said they expected a ruling the same day or within a week. However, Fields said at a recent court hearing that due to certain developments he expected movement on the issue "soon."
The accounting referees in the case were initially opposed by the Slesinger firm, Fields' client, which charged that one of the referees was tainted by his association with Disney's then-defense lawyer, senior Skadden, Arps, Meagher & Flom litigator John Donovan because he was a forensic accountant in Donovan's multimillion-dollar divorce before Donovan recommended him to the court.
Neither Donovan nor John Costello, the referee challenged by the plaintiffs, has responded to requests for comments, and neither Disney attorney Daniel Petrocelli nor Bonnie Eskenazi, an attorney working with Fields, responded to voicemail messages requesting a comment on the development Tuesday. Fields and Disney spokeswoman Michelle Bergman were not available for comment, their respective secretaries said. A spokesperson for the Slesinger family would neither confirm nor deny the report.
The significance of the breakown may be that a long-delayed ruling by Judge Ernest Hiroshige may now be entered into the record, which was sealed from public view by the court for 11 years. However, the courtroom clerk who confirmed receipt of the faxed letter said that no such inference should be drawn.
The American Reporter earlier this year reported that Judge Hiroshige was displeased enough with the accounting to order Disney's lawyers not to bring Costello's firm, the nationally known forensic accounting firm of Gursey, Schneider & Co., into his court again.
Adding to the mystery about the long delay was the revelation in The American Reporter that Arthur Andersen & Co. senior partner Christopher Paskach appeared for Disney over a several year-period at accounting hearings during the time a huge trove ofdocuments protected by court order were destroyed by Disney.
Paskach has also failed to return calls requesting comment on his role in the case.
When Disney attorneys revealed the document destruction some 10 months afterit occurred, the studio was subjected to heavy evidence penalties that many say will significantly hamper its case at trial, which has been set for early 2003.