UPDATE 1-Winnie ruling wallops Disney
In a major setback to the Walt Disney Co. in the long-running Winnie the Pooh royalties case, a California appellate court Wednesday let stand potentially devastating jury instructions.
Disney appealed an August 2001 order by L.A. Superior Court Judge Ernest Hiroshige imposing sanctions because it destroyed documents, including a filed marked "Pooh-legal problems."
Hiroshige's order stated that a jury could be told as a fact that Disney willfully suppressed evidence. He also ruled deceased Disney employee Vincent Jefferds said the Slesinger family -- the plaintiffs -- would be paid royalties on video cassettes. Finally, the trial judge ruled Disney was prohibited from disputing the Slesingers' version of the facts relating to Jefferds' statements.
The Slesinger family, which holds North American rights to Pooh and has licensed them to Disney since the 1960s, claims it has been cheated of royalties by hundreds of millions of dollars. The family wants the money and the right to terminate the Disney license.
During oral arguments on the appeal earlier this month, Disney attorney Daniel Petrocelli described Hiroshige's non-monetary sanctions as "massive and crippling" and so prejudicial they could prevent Disney from trying the case.
Hiroshige also imposed monetary sanctions on Disney of $90,000 -- a large amount for sanctions, but a small amount in a case with potential damages of $1 billion.
In a tactical move, Slesinger attorney Bert Fields waived the monetary sanctions, leaving Disney's only avenue an appeal of the jury instructions.
In a decision released Wednesday, the California Court of Appeal ruled there may be questions as to the correctness of the sanctions, but it refused to hear Disney's appeal, ruling non-monetary sanctions cannot be appealed immediately, but must wait until the case is over.
Fields said, "An extraordinarily capable and highly respectable panel of the California Court of Appeal has done the right thing, and the demonstrably correct decisions of the trial judge will apply at the trial of this case contrary to Disney's attempt to get out from under the sanctions that were awarded against them for their destruction of documents and what the trial judge found were false and misleading statements.
A Disney spokesman said, "It is unfortunate that the rules did not permit the Court of Appeal to get to the underlying issue, but we're gratified the court saw that questions remain as to the correctness of the trial court's sanctions, and Disney will continue to challenge vigorously those sanctions."
Earlier this month, Disney announced it had reached an agreement with the heirs of A.A. Milne and E.H. Shepard, the Pooh books author and illustrator, under which the heirs would reclaim merchandising rights from the Slesingers and grant them to Disney. The Slesingers are contesting the agreement in separate litigation.
Reuters/Variety
