The Walt Disney Co. has lost a round in a long-running litigation over royalties on “Winnie the Pooh” with a judge’s ruling that Disney willfully destroyed documents.
In a 22-page decision filed Friday, L.A. Superior Court Judge Ernest Hiroshige held that plaintiff Stephen Slesinger Inc. — the company that licenses author A.A. Milne’s “Winnie the Pooh” characters to Disney — is entitled to monetary sanctions and a jury instruction that Disney willfully suppressed evidence to prevent it being presented at trial.
Hundreds of millions of dollars are at stake in the underlying lawsuit, which was filed in 1992 by Slesinger to resolve disputes over the terms of its 1983 agreement with Disney.
Disney’s position is that under that agreement it does not have to pay any royalties on “Pooh” videos or computer software. On other merchandise, such as stuffed animals, amounts and sub-categories on which royalties are owed are in dispute.
As outlined in Hiroshige’s lengthy opinion, Vince Jefferds, Disney’s president of consumer products in 1983, negotiated the 1983 agreement on Disney’s behalf. Slesinger contends that Jefferds’ files contained correspondence that supported its position that it is entitled to royalties on videocassettes.
In 1994, two years after the lawsuit was filed, Jefferds’ replacement authorized the destruction of all his files. On April 15, 1997, Disney stated that it could not find the correspondence. The very next day, it claimed it learned for the first time that the files had been destroyed. In March 1999, it finally disclosed to Slesinger that it had destroyed approximately 40 boxes of Jefferds’ files in 1994. In December 1999, Disney disclosed that it also had destroyed a box of files marked “Winnie-the-Pooh, legal problems.”
Slesinger is represented by McCambridge, Deixler & Marmaro, which recently merged with Proskauer Rose. The firm declined to comment.
A Disney spokeswoman declined to comment on the judge’s order, noting that the entire case file has been sealed and Disney’s position is that the sanction decision is also sealed.
“We remain confident that we will ultimately prevail on the merits of the case,” the spokeswoman said.