NEW YORK — In a public relations black eye for the Walt Disney Co., a Los Angeles federal jury ruled Friday that the entertainment conglom improperly coerced a dying employee into renouncing millions of dollars in assets, including his pension, stock options, life insurance and deferred compensation.
After reviewing motions from both sides, U.S. District Judge Dean Pregerson will decide how much Disney will pay the estate of the late Robert Jahn, who died of AIDS complications in May 1994 at age 54. Jahn had been in charge of producing trailers and TV ads for Disney films as a senior VP at the company’s motion picture and television group.
The crux of Disney’s case was that Jahn had voluntarily relinquished all claim to the benefits, totaling as much as $2.8 million, in order to avoid being exposed for having taken kickbacks from vendors. Disney claimed Jahn allowed subcontractors to overbill for services, costing the company $5.7 million. Company lawyers said Jahn gave up claim to the benefits orally in late 1993 and then in a written contract the following April in exchange for his salary and medical benefits.
The jury, however, declared that the agreement Jahn made with a Disney official at the Cedars-Sinai Medial Center three weeks before he died was invalid.
Disney’s Sanford Litvack testified during the two-week trial that Jahn had admitted to him in December 1993 that he had taken about $60,000 in payoffs.
Litvack testified that in exchange for Jahn’s agreement to give up his benefits, Litvack had promised that the studio would take no legal action against Jahn. And Litvack said he had agreed not to mention the alleged kickbacks to Jahn’s boss at the time, Jeffrey Katzenberg.
Lawyers for Jahn’s estate had denied the allegations, which they claimed were fabricated by a disgruntled former employee of Jahn’s. And they said Jahn had been too ill at the time to defend himself properly. The jury also ruled that there wasn’t enough evidence presented at the trial to support the allegations of wrongdoing.
Jahn’s estate first filed suit in April 1995. A federal judge dismissed the lawsuit in January 1997 and a federal appeals court reinstated it in January of last year.