California court affirms dismissal of 'Pooh' case

Disney won a major battle Tuesday in its years-long war with the Slesinger family over Winnie the Pooh royalty payments when a California appellate court affirmed the 2004 dismissal of the case for misconduct.

In a 48-page opinion, a three-judge panel held that in a case of first impression, when “a plaintiff’s deliberate and egregious misconduct makes any sanction other than dismissal inadequate to ensure a fair trial, the trial court has inherent power to impose a terminating sanction.”

In a statement, Stephen Slesinger Inc. said it would seek to appeal the decision to the California Supreme Court. It said it also would continue to pursue its remedies in a companion federal court case that was originally brought by Disney but has been used by the Slesingers as a vehicle to attempt to terminate the license with Disney.

In 2004, when the case already was more than a decade old, L.A. Superior Court Judge Charles McCoy held a weeklong hearing into whether the Slesingers had destroyed documents.

Disney claimed the family had hired a private investigator who stole thousands of documents from the studio’s trash bins and then lied about it to cover up the fact that they possessed crucial privileged documents.

As outlined in McCoy’s opinion, Pati Slesinger and her husband David Bentson hired Terry Sands to find helpful documents. Sands, in testimony McCoy said was not credible, claimed he took only documents from publicly accessible trash bins. McCoy also found that Pati Slesinger altered privileged licensing documents to conceal their origin.

The 2004 ruling, in which McCoy dismissed the Slesingers’ claims as punishment for “egregious and dishonest misconduct,” was a major turning point for Disney, which had suffered a string of defeats in the case, including a tough sanction order against it for its own destruction of documents.

Dan Petrocelli, who represented Disney in the Pooh case, said, “In the strongest terms, the court sent a message that if you cheat in the courts, you forfeit your rights to the courts.”

The case began in 1991, when members of the Slesinger family became convinced that Disney was cheating it on royalties. Stephen Slesinger originally obtained North American rights to Pooh from author A.A. Milne in the 1930s. Shirley Slesinger Lasswell, his wife (who died while the case was pending), licensed Pooh to Disney in the 1960s. With Pooh as Disney’s most lucrative character, and damage estimates running as high as $1 billion, the case was a nightmare for Disney. Currently, the Slesingers claim the rights are worth $12 billion-$15 billion.

In 2002, in the midst of the state case, Disney filed a copyright case that attempted to terminate the Slesingers’ license. Disney announced that Clare Milne and Minette Hunt, the granddaughters of Milne and Pooh illustrator E.H. Shepard, were terminating the license and granting the rights directly to Disney. The court rebuffed that effort, and the 9th Circuit Court of Appeals found the license was valid.

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