Testimony shifts to employment law

After weeks of testimony, the waning days of the Disney shareholder trial over the $140 million severance payment to Michael Ovitz has became a battle of the employment law experts.

Attorney John Fox took the witness stand again Friday, testifying as an expert on behalf of the defendant Disney board members that there were “lots of good reasons” for Disney CEO Michael Eisner to fire then-president Ovitz but no grounds to fire him for cause and deny him his severance package.

Fox testified that the law is vague on what constitutes good cause for termination but that there were no grounds for firing Ovitz for cause. Fox maintained that Disney would have lost a wrongful-termination suit at trial and that the cost of settlement would have been more than the severance payment once fraud and defamation claims were added.

Under questioning by plaintiffs’ attorney Steve Schulman, Fox testified that high-level executives frequently seek and receive contract clauses that condition termination on standards higher than “for cause.” Ovitz’s contract required gross negligence or malfeasance, and Fox said some executive employment contracts have an even tougher standard — being charged with or convicted of a felony. The rationale, Fox said, is that the half-life of high-level executive is fairly short and they bargain for protection when they are at their peak.

Testimony not free

The price of expert testimony does not come cheap. Fox, an attorney at the California firm Fenwick & West, said his firm has billed close to $400,000. Ovitz’s expert, well-known litigator Larry Feldman, testified earlier that he billed $725 an hour for approximately 150 hours of work. Plaintiffs’ expert Yale Law School professor John Donohue was paid $500 an hour for his work on the case.

Trial resumes Wednesday for its final week, with Fox back on the stand. Plaintiffs seek the return of the $140 million Disney paid to Ovitz after it terminated the onetime Disney president after 14 months. The 7-year-old case commenced trial in October. Delaware Chancery Judge William B. Chandler III is expected to take several months to issue a written opinion.

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