A Los Angeles County Superior Court judge Monday abruptly ended more than a decade of legal wrangling over merchandising royalties for Winnie the Pooh, handing Walt Disney Co. a major victory and taking a powerful swipe at the family that claimed it had been cheated out of hundreds of millions of dollars.
Judge Charles W. McCoy accused the Slesinger family -- which holds the lucrative merchandising rights -- of trying to gain an edge by stealing confidential Disney documents and then lying and altering court papers to cover up the thefts.
The plaintiffs' "willingness to tamper with, and even corrupt, the litigation process constitutes a substantial threat to the integrity of the judicial process," the judge wrote. "The court finds that [the plaintiffs'] misconduct was willful, tactical, egregious and inexcusable."
Disney's victory comes at a crucial time for Chief Executive Michael Eisner, who has been fending off a campaign to oust him after 20 years at the helm of the Burbank entertainment giant. Losing the case could have cost the company several hundred million dollars and provided more fodder for critics. Eisner met with the family last summer to discuss a settlement, but talks were abandoned.
"After 13 years in the courts, the Winnie the Pooh case is finally over," said Daniel Petrocelli, Disney's lead attorney. "Our position has been vindicated in its entirety."
The judge's scorching ruling stunned the heirs of Stephen Slesinger, a New York literary agent and a pioneer in the business of marketing cartoon characters. He had acquired the Winnie the Pooh merchandising rights for $1,000 in 1930 from A.A. Milne, the author of the children's stories about the honey-loving bear and his forest friends.
Slesinger's widow, Shirley Slesinger Lasswell, granted Disney the merchandising rights to the characters in 1961 in exchange for royalties. Pooh is now Disney's most profitable character, raking in more than $1 billion annually for the company and outmuscling Mickey Mouse as a money maker.
In 1991, Lasswell and her daughter, Patricia Slesinger, sued Disney, claiming that the company had failed to pay them millions of dollars in royalties for videos, computer software and other merchandise.
The family, in a statement Monday, vowed to appeal: "This decision unfortunately sends a strong message to corporate America that it is OK for companies like Disney to steal and renege on its contractual promises."
The Disney motion that led to the dismissal did not attack the merits of the Slesingers' case but rather the family's behind-the-scenes conduct in obtaining confidential documents that provided insights into the company's legal strategy. Disney lawyers contended that the papers were stolen. The Slesingers said the documents were legally taken from publicly accessible trash bins.
During a five-day hearing that concluded this month, Terry Lee Sands, an unlicensed private investigator, testified that he had been hired by Patricia Slesinger's husband to find discarded documents. He said he found them in dumpsters behind a satellite Disney building in Burbank.
On Monday, Judge McCoy said in his 28-page ruling that he simply did not believe Sands.
Among other things, the judge said, key Disney executives and attorneys involved in the lawsuit did not work at Disney's Buena Vista Plaza complex in Burbank, making it unlikely that their trash would have been found in dumpsters there. Also, the judge said the volume and highly sensitive nature of the documents made it virtually impossible that they all ended up in one cluster of dumpsters.
Reached at his Van Nuys home, Sands stood by his story.
"It's all lies," he said. "I did not steal any documents."
Sands added: "My assignment was to find out whether Disney was discarding documents.... I was supposed to go to their businesses and see where their trash was being dumped and how much was being dumped. I got everything from the garbage."
The judge didn't buy it. He said Sands was trespassing on private property, and thus, stealing. They "had no right to break laws to obtain evidence," McCoy wrote.
McCoy's decision does not erase Disney's obligations to continue to pay the Slesingers royalties -- at least for a while. The company is pursuing a separate copyright claim in federal court that, if successful, would terminate the payments.
During the last two decades, Disney paid the family more than $82 million. In recent years the royalties have averaged about $11 million a year.
The case, one of the longest-running in Los Angeles County, has taken several twists and turns along the way. More than three judges and a dozen law firms have been involved, filing hundreds of thousands of documents. Publications from around the globe, including the Times of London and the South China Morning Post, have written about the fracas.
There has been plenty of mudslinging and allegations of wrongdoing on both sides.