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Litvack: No cause for axing Ovitz

Former chief counsel slams Mike but defends him

Walt Disney’s former chief counsel Sanford Litvack — who once quipped that he had to follow Michael Ovitz around with a shovel — acknowledged an intense distaste for the former Mouse prexy but said the uberagent had done nothing to warrant a firing for cause.

“He was not guilty of malfeasance. He was not guilty of negligence. He was guilty of not being able to do his job. … It’s terribly unfortunate, but he had never done anything wrong,” Litvack told a Delaware court in testimony dotted with agent bashing and Ovitz body slams — even as he defended the former exec.

“If there was a way not to pay him, I would have loved not to pay him,” he said. “I didn’t like him. He didn’t like me.”

The two men fought often. Litvack claimed he would have quit if not for the gleam of hope that Ovitz might get the boot.

Did Ovitz lie? asked Litvack’s lawyer.

“I am aware that some questions were raised from time to time about his honesty. (They were) nonsensical. Michael Ovitz was an agent. Did he ever exaggerate? Yes. … Did he ever say, ‘I was on the phone talking with Julia Roberts, that’s why I was late for the meeting.’ Yes. Was he talking to Julia Roberts? I don’t know.”

Ovitz was also an unabashed spinmeister. Litvack insisted that’s all that was meant in a vitriolic memo from Eisner to Ovitz that read, “Sandy has given me example after example of your not telling the truth.”

Litvack dismissed other claims that Ovitz spent extravagantly on a new office and said Ovitz always reported gifts according to company policy. All are criticisms leveled by shareholders who believe Disney could have fired Ovitz for cause without granting his severance package worth about $140 million.

Litvack said he discussed a termination for cause with several former colleagues from his old law firm, Dewey Ballantine, and with fellow board member Joe Santaniello. He acknowledged he’d never sought a written opinion from an outside law firm.

“I knew the facts. I had lived with the facts. If I went to someone else, they’d have to come to me to learn the facts,” Litvack said. “If it would have solved everything so I wouldn’t be sitting here today, I would have gotten one. I didn’t.

“We were thinking of firing the president of the Walt Disney Co. I wasn’t about to go and hire someone and say ‘conduct an investigation.’ As far as I knew, nobody knew about this” except the board, he added.

The two men were fated to never bond. Litvack admitted that Ovitz had waltzed into a job he himself had coveted.

Litvack asked Eisner about the possibility of becoming Disney’s No. 2 after the 1994 death of prexy-chief operating officer Frank Wells. “I was ambitious. I thought I had some of the same talents as Frank. Frank was a lawyer. I am a lawyer. I’d been handling … legal and human resources. I thought I provided a nice counterbalance to Michael Eisner’s talents.

“I raised it with him, and he never said no. In other words, he never said, ‘Forget it. It’s not happening.’ But it wasn’t happening. It was evident that for whatever reasons Michael felt that … I didn’t fulfill what he needed.”

Instead, Litvack said, he became a sort of chief of staff to Eisner, the CEO’s closest confidante — a role possible only if he had no shot at No. 2, “because then he could talk to me about everyone else.”

He testified that Eisner summoned him to Aspen in the summer and they laid out top picks on a legal pad. Litvack said the list included Michael Ovitz, Barry Diller, Bob Daly and Joe Roth.

Litvack said he felt Eisner favored Ovitz. But Litvack was not aware — nor was he pleased to discover later — that Eisner was already in the process of negotiating a deal with the CAA founder. “I was angry. I was troubled. I was upset,” he said. “I thought I had a really close relationship with Michael.”

Still, he insisted, he felt the arrival of a Hollywood superstar like Ovitz was a coup for Disney, especially with worries over succession following Eisner’s recent heart surgery. The board, he said, was “ecstatic” — with the exception of chief financial officer Steven Bollenbach.

Bollenbach “felt that this was a mistake, that we were going to mess up a good working relationship. He was going to try to talk Eisner out of it.

“Basically, I said, ‘Steve, lots of luck.’ ”

Ovitz was hired. In the umpteenth iteration of that famously dour dinner party at Eisner’s home, Litvack described Bollenbach’s declaration that he’d only report to Eisner, as per his contract, not to Ovitz.

“At some point, I chimed in and said, ‘I’m not going to either.’

“Michael Ovitz said, ‘OK, I understand Steve, if that’s the deal he made. But why won’t you?’

“Bollenbach said, ‘Because he’s my partner. We work together, and that’s the way it’s going to be, Michael.’ I was surprised because I don’t know if I would have had the nerve.”

Litvack said Ovitz chased big deals and big stars, alienating other execs. He added that Ovitz couldn’t function as a second in command or grasp the issues of a publicly traded company.

“Not to be flip, but he was a failure. I think that was very hard for him to accept, and I don’t think he believes it to this day.”

He described a verbal altercation after countermanding a decision by Ovitz to let Disney characters appear on the David Letterman show, which was taping on the West Coast.

Between meetings, the duo went into the hallway. “He said, ‘You cannot, must not, should not overrule things I have done.’ ”

“I said, ‘I’m sorry. I tried to reach you.’ ”

“He said, ‘As long as I’m here, you do as I say.’ ”

“I said, ‘Well, if you’re here, I may not be here.’ ”

“He said, ‘I’m going to be here for a long time.’ ”

“I said, ‘Well, I’m not.’ ”

Eisner summoned them like two petulant children and ordered them to shake hands and make up. Litvack said he was further infuriated when Ovitz insisted that he hadn’t been angry at all.

“I said, ‘Michael, If you weren’t, you did a great impression of a guy who was angry.’

“I’m a lawyer. I’m not used to being handled like that. I’m not used to being treated by an agent as though I don’t know what’s going on,” he added.

In May 1995, Litvack basically told Eisner, it’s him or me. Eisner sympathized but asked for time. He promised to assess the situation “at year’s end.”

Then, “He said, ‘If by the end of February…’ and I remember thinking: How did we go from the end of the year to the end of February? But we did, in about 20 seconds.”

By late December “I’d had it up to here,” Litvack said. He said he warned Ovitz, “If I were you, I would start thinking about how you can get out and maintain your credibility… because if you don’t, I think this is heading in one direction.”

Ovitz “said, ‘Huh’ (and) literally spun on his heel and walked out.”

Litvack reported the incident to Eisner.

Eisner asked if Litvack had made it clear to Ovitz that Eisner shared the sentiment. ” ‘Did you tell him that I said that?’

“I said, ‘No, I didn’t tell him that.’

“He said, ‘You should have told him I wanted him (to leave).’

“So I went to (Ovitz’s) office. I said, ‘Michael Eisner wants you to go.’ And he said, ‘If Michael Eisner wants me to go, he should tell me himself.’

“And I said, ‘Son of a gun, you’re right.’ And I left and reported the conversation to Eisner.”

At one point, Ovitz started talking to Sony.

“I thought it would be a tremendous solution. I hadn’t come to like him over time. But I felt that if he were fired, he’d end up where he did. Nowhere. And with a reputation that was in tatters.”

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