Vol. 12, No. 3,009 - The American Reporter - October 19, 2006

The Pooh Papers

by Joe Shea
American Reporter Correspondent
Hollywood, Calif.

Printable version of this story

LOS ANGELES, Oct. 19, 2001 -- The Walt Disney Co. is asking California's Second District Court of Appeal to reverse financial and legal sanctions against the company for the destruction of records in a long-running, high-stakes case that could cost it tens of millions in past-due and future royalties and the right to sell billions of dollars worth of Winnie The Pooh products in the United States and Canada, the American Reporter has learned.

The notice of appeal filed Monday, Oct. 16 by Daniel Petrocelli of O'Melveny & Myers only asks to appeal an order mandating payment of monetary sanctions, but sources contacted by The American Reporter say that Disney will also ask the higher court both to begin settlement hearings before two settlement judges and to conduct a full-blown hearing on monetary and issue sanctions handed down by Judge Ernest Hiroshige of Los Angeles County Superior Court on Aug. 17, 2001.

According to sources, Disney says Hiroshige abused his discretion in placing the sanctions. If the appeal is heard, it could substantially delay a forthcoming trial that had been expected to begin in February.

Because the sanctions decision remains under seal, the precise details are not available, but a variety of sources have described them in general terms to The American Reporter.

An effort by Los Angeles Daily Journal columnist Garry Abrams to get earlier documents in the case unsealed was rejected by the California Supreme Court in 1999, and an FOI request by The American Reporter for the Aug. 17 opinion was turned down by the court late last month.

Through the court's spokesperson, The American Reporter was advised by the court to file a formal motion to unseal the record. Court rules for the sealing of case records were modified after Abram's request, and a decision in another Walt Disney case appealed to the Second Circuit was unsealed.

Petrocelli was in an all-day meeting and not available to discuss the case Friday, his secretary said. The Slesinger firm is represented by Greenberg, Glusker of Century City. Lawyers there also were not available for comment Friday afternoon.

The sealed Aug. 17 ruling, according to sources familiar with it, orders Disney to pay Stephen Slesinger Inc., the owner of the rights, an undisclosed amount of past-due royalties and prohibits Disney from arguing at a future trial that it does not owe Slesinger royalties on a wide variety of Pooh items it has refused to pay. Those include video, w holesale and promotional merchandise and computer software, the sources say.

Testimony at a rare public hearing in August showed that Disney paid royalties on $1.1 billion of Pooh sales last year, but Slesinger attorneys argue that Disney excluded payments on another $2 billion. The Aug. 17 sanctions could make Disney liable for as much as 10 times the royalties it has already paid, and billions more in the future, accordiing to sources familiar with the case.

The company's stock closed Friday at $18.45.

Copyright 2006 Joe Shea The American Reporter. All Rights Reserved.

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