Reuters: Disney may be liable for $1 bln Pooh case - attorney

[Mop]

http://biz.yahoo.com/rc/020827/media_disney_1.html

This *STINKS* of extortion. In the middle of a financial crunch for Disney, a lawyer says that Disney could end up cough up a billion dollars in a lawsuit. What he's really saying is that if Disney doesn't settle this case quickly and quietly, that he's going to bad mouth them in the press and hurt their stock price and bond futures even more.

I don't know if his case has merit or not. But now I'm 100% behind Disney on this, just because of the sleazy tactics he's using.

Raul/Mop

 

[DisneyFanGuy]

MOP, this is typical of lawyers posturing for position in any large case. Think of it as an entertaining show, and not much else.

I know nothing about what Disney did, was supposed to do, or anything else, but they have had quite a recent history of judgements against them resulting in very large settlements.

Pooh is Disney's big bucket of gold revenue. They are worried enough about this to avoid mentioning the new Pooh ride being built at Disneyland by name.

The family may be right here. Maybe Disney does owe them millions of dollars. Based upon Disney's recent history of poor decisions, would that surprise you?

I've never heard of a billion dollar settlement, but they did pay Jeffry K 250 million. Nothing shocks me anymore.

 

[Sarangel]

I hate to say it, but I think Disney is in the wrong on this one. They shredded a bunch of documents relating to the case last year. Here's an article found on LaughingPlace.com that shows both sides in a more reasonable light.

A group of Walt Disney Co. shareholders sued Disney this week, claiming the company failed to disclose potential liability in an ongoing lawsuit over Winnie the Pooh revenues. By its own admission, Disney stands to lose hundreds of millions of dollars and certain rights to license Pooh (Tigger, Eeyore, Christopher Robin and all the characters from the Hundred Acre Woods) in the U.S. and Canada.

According to Bert Fields, lawyer for the family that owns the Pooh rights, the amount could be closer to one billion dollars, plus punitive damages, plus future Pooh earnings if the royalty agreement is terminated. Some industry experts estimate that Pooh accounts for up to 25% of Disney's annual revenues of over $25 billion.

Although the Pooh dispute has been in court for a decade, it only became public in May when Disney disclosed the potential liability in its SEC filing.

The plaintiff in the case is Shirley Slesinger Lasswell, the 79-year old widow of licensing pioneer Stephen Slesinger, who teamed up with Pooh author A. A. Milne in the 1930s to expand Pooh beyond the confines of his books. After her husband died, Mrs. Lasswell extended Pooh product and service uses in the States. In 1961, she granted Pooh rights to Walt Disney himself, striking a deal that gave Disney all U.S. and Canadian television, merchandising and future media rights. In exchange, Milne and Slesinger were given a percentage of gross revenues generated by Pooh-related products and services worldwide. (Disney has since bought out Milne's interest.)

"It's truly a shame that Disney let this go so far," said Mrs. Lasswell. "I never wanted to see Pooh get publicity like this, but Disney brought it on themselves. All we're asking for is what we're owed."

Last year, an L.A. Superior Court judge imposed sanctions on Disney after finding it destroyed thousands of documents in the case including a file entitled "Winnie the Pooh Legal Problems." In a separate tentative ruling in June 2002, the judge scolded auditors for meeting regularly with Disney behind closed doors and rejected their method for estimating part of Slesinger's damages. This ruling, which involves only a small portion of the total case, could itself result in an award to Slesinger of $200 Million, according to Disney estimates.

 

[mjstaceyuofm]

I'll share my $0.02 worth on the matter:

First, as far as shredding documents goes, let's not jump to conclusions here. Most companies have a regularly scheduled file retention/deletion date. Obviously there's certain things that are exempt from this (i.e. archive items - blue prints, legal documents, etc.), but if the files in question fell within a regularly scheduled cycle then let's not get all worried about it until we have definitive proof indicting Disney of something conniving.

Second, sounds like these people are just trying to squeeze as much $$$ as they can out of Disney. To that end, I think they'd be crazy to dissolve a partnership with Disney. Disney has the marketing power and the brand name to effectively generate the billions in revenue that the Pooh product line can. If they win their case and terminate their partnership with Disney, who could effectively market and sell Pooh products better than Disney? No one is as multi-faceted as Disney. With Disney you get huge market-share spanning merchandise, movies, themeparks, stores, tv, etc. No other company comes close to that.

 

[Another Voice]

“Let’s not jump to conclusions…”

Well, it’s been said (in court testimony I believe) that one of the boxes that was shredded was labeled “Do Not Destroy – Pooh Litigation”. It’s kind of hard not to think of that as “conniving”. And it wasn’t even the first time Disney had been held in contempt of court for destroying documents in the case. Nor was it the even the first time that Disney was convicted of destroying court-protected documents. There were two separate injury cases at Disneyland where Disney destroyed evidence the court had ordered preserved. A lot of Disney’s problems are directly related to Disney’s actions and the suspicions they’ve put themselves under.

Remember the second part of the article – Disney was trying to “buy off” the court appointed auditors and violating yet another set of court orders. The abuse was so bad that the judge ordered the auditors fired and threw out all of their findings (and will probably slap Disney with one more fine as well). And the reporter who wrote extensively about the case (and eventually forced Disney to disclose the liability to the SEC [and yet another investigation about why it took so long and yet another shareholder lawsuit for hiding it]) has also filed suit. She claims (with some evidence to back up her story apparently) that Disney forced her newspaper to fire her. Whether or not you think her case has merit, the public relations is still a problem.

And there are a lot of legal types around town that are convinced that the only way Disney hasn’t been really trashed in this case is because they are “Disney”. Any other company, the thinking goes, would have been slammed Enron-style for both the flagrant violation of the contracts and of the courts. What started as a simple case of defrauding a widow has now turned into a major legal mess. Now that Wall Street is watching closely, the expected bad outcome for Disney is going to seriously weaken the stock price.

And Disney’s behavior has forever destroyed the possibility of keeping the license for ‘Pooh’. Under California law, the plaintiff can recover all rights to the license and that’s exactly what they intend to do. Disney’s marketing muscle is no where near as strong as it used to be. The ratings for Nickelodeon dwarf that of The Disney Channel – imagine what they could do with Winnie the Pooh. Imagine Dreamworks or Universal putting out a ‘Pooh’ movie when Disney’s efforts have been reduced to cheap Saturday morning animation quality videos. Or instead of card board cutouts, imagine a theme park building the complete 100 Acre Woods. There are plenty of people willing to treat the license well.

In the end, I find this whole episode extremely depressing. For the last fifteen years or so, Disney has lost a string of contract violation court cases. They seem to have learned absolutely nothing and, in fact, their behavior seems only to have gotten worse. Worse than loosing a sense of Walt Disney’s ideals, they seem to have lost any sense of ethics.

 

[Bob O]

I cant outdo AV's great post. But from watching the case disney has acted in a deplorable manner and thought by using all the lawyers and the money at their disposal they could force the little guy to buckle under. So they knowingly violate court orders in a attempt to win a case.
And Pooh doesnt need disney its, Pooh is a household name and can sell it self without disney behind and will have alot of suitors happy to help them capatilize on their product. At this point disney need Pooh alot more than Pooh needs disney and with the way disney has treated the family their is little hope for any middle ground to be found. You would think after the katzenberg debacle disney would learn.

 

[mjstaceyuofm]

“Do Not Destroy – Pooh Litigation”

Mud in my face. I'd call that definitive proof.

As to the marketing of Pooh, I still maintain that Disney does a better job than any other company potentially would. Disney is all encompassing in it's marketing of Pooh. Sure, others could do a better job for an individual market segment, (i.e. Nick doing a tv show, Dreamworks doing a movie, a tie-in with some other amusement park, toy merchandise, etc.) but only one company has all these things under one roof that we're all used to Pooh being associated with. I just think the plaintiffs would completely miss the boat if they severed ties with Disney if making money is their goal.

 

[Planogirl]

Nickelodeon is already associated with Universal and I've heard that Dreamworks is looking for a steady gig...

 

[Bob O]

If the pooh heirs are correct in their lawsuit disney has done a good job of making sure they make as little as possible while maximizing their own return. So even a deal that isnt as all involved as disney(not that i buy that perference) the family will still be far better off.