Judge nixes expense report on Ovitz

Shareholders won't be able to rely on reports

NEW YORK — The judge in the Disney shareholders trial has tossed out a much-touted report on Michael Ovitz’s lavish expenses.

Order means that when making their final argument, shareholders won’t be able to rely on as fact a PricewaterhouseCoopers report that Ovitz billed Disney for more than $1 million in expenses, some questionable, during his 14-month tenure at Disney.

Other testimony related to Ovitz’s expenses is still part of the trial record.

Move represents a win for Ovitz and the Mouse House, but the judge refused to throw out Michael Eisner memos indicating that Eisner had doubts about Ovitz from the beginning — a victory for the other side.

In a second win for the shareholders, the judge is keeping in the deposition of Sid Bass, a principal Disney shareholder during Ovitz’s ill-fated run as Disney prexy in 1995-96. Bass testified in his deposition that Eisner had “given up” on Ovitz within weeks.

Delaware Chancery Court Judge William B. Chandler III, who will soon begin deliberating the case, detailed what evidence he’s keeping in and what evidence he’s not in a four-page order dated Feb. 4. All sides had made numerous objections to certain evidence throughout the trial, which ended early last month.

Also in recent days and under order from Chandler, Disney submitted a sworn affidavit stating that it couldn’t find two memos sought by the shareholders and mentioned in an excerpt of James B. Stewart’s upcoming book “Disney War” that appeared in the New Yorker.

The book has been causing plenty of buzz within Disney and around Hollywood, with “Disney War” publisher Simon & Schuster quietly deciding to move up the publication date from March 7 to Feb. 22.

Rushed release sked comes after Disney warned Simon & Schuster that it would consider legal action if the book contained mistakes; Simon & Schuster sent its own letter demanding that the Mouse House return any and all unauthorized manuscripts.

Back in Delaware, Chandler’s evidentiary order had all sides pleased, albeit for different reasons. He won’t even begin to rule on the case until late April, after a series of post-trial briefs are submitted.

Shareholders have argued that the expense issue was grounds enough to fire Ovitz for cause, which would have deprived him of a $140 million severance package they now want paid back by Ovitz and the Mouse House.

Both Ovitz and Disney wanted the PricewaterhouseCoopers report thrown out.

But it was only Ovitz’s lawyers who asked that certain Eisner memos and the Bass deposition be tossed out. Chandler refused to strike these docs, saying he would consider them when ruling on the case and giving shareholder lawyers the greenlight to cite these materials when penning their final argument.

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