Disney Current Events
Topic: AmericanReporter: Judges Hand Disney Devastating L

#	Author	Message
1	Rebekah Thu 11/21/2002 5:37p	This topic is for discussion of the 11/21/2002 news item AmericanReporter: Judges Hand Disney Devastating Loss In Pooh Appeal According to the November 21st American Reporter, the California Court of Appeals refused to consider an appeal to the harsh sanctions imposed on Disney by Judge Hiroshige for its destruction of thousands of documents in the ongoing lawsuit over Pooh royalties.
2	Hans Reinhardt Thu 11/21/2002 5:37p	Question: If Disney's has to cough up a billion dollars to settle this case where does that money come from and how does it affect the company's bottom line?
3	Futurist Thu 11/21/2002 6:10p	Question: How do we get rid of the all the idiot execs throwing their weight around as if they are God?
4	JeffG Thu 11/21/2002 7:06p	>> "If Disney's has to cough up a billion dollars to settle this case where does that money come from and how does it affect the company's bottom line?" << Most large corporations either have insurance against large judgements or "self-insure" through a fund set aside for such purposes. If they really did get hit with a billion dollar judgment that somehow survived through appeal, that certainly would have a pretty big impact on the company's bottom line. The chances of that happening are pretty slim, though. This is a victory for the Slesingers, but the headline in the article is also something of an overstatement. Note that the word "devastating" came from the Slesingers' lawyer. The appeals court didn't rule on the merits of the argument. Instead, they simply ruled that now was not the appropriate time to appeal this particular point. If Disney loses at trial, they will certainly appeal on the basis of these jury instructions. From what I've been reading, they probably will have a pretty good chance at winning. Essentially, the issue in question is that the trial judge is not permitting Disney to dispute certain key issues, particularly that the Slesingers were promised royalties for videos, as a punishment for destroying evidence. Note that the Slesingers waived a monetary fine that was also levied against Disney. The fact that they did that was why the appeal couldn't be heard at this time. Legally, they can appeal sanctions that include a monetary fine at any time, but the jury instructions cannot be appealed until after trial. Had the monetary fine been kept in place, the appeals court would likely have heard the appeal and could have chosen to completely throw out the sanctions (including the jury instructions) had they felt they were not warranted. I'm guessing that all of this is largely an effort to try and get Disney to settle this once and for all. I wouldn't be at all surprised if both sides are essentially playing chicken here trying to get the best possible rulings, but that they will settle the matter (certainly for way less than $1 billion...) before it makes it to verdict. One thing to keep in mind is that it really isn't in the best interest of the Slesingers if they fully win everything they are asking for here. Should they end up taking away Disney's merchandising rights for the Pooh characters as they have been threatening, they would end up with a significantly less valuable property. The Slesingers do not own the character outright and they cannot do anything other than license or produce merchandise without the permission of the Milne family, who already have given Disney long-term, exclusive rights. In addition, any non-Disney licenses that the Slesingers sold for the character would not be legally allowed to use the likenesses from the Disney productions, which are obviously the most familiar and desired versions. Ultimately, this is really all about how much money they can get Disney to shell out and how favorable a long term deal they can work out. While losing the Pooh license would be very hard on Disney, it would certainly be >much< harder on the Slesingers if they lost the Disney deal. -Jeff
5	Darkbeer Thu 11/21/2002 7:52p	A couple of quotes that got my attention... >>When (Disney attorney Daniel J.) Petrocelli seemed to plead with the judges for special consideration because of the importance and image of Disney and asked that he be permitted to brief the judges further, they rose, declined aloud to do so, and left the appellate chamber. Witnesses present at the appeal said they could not remember when an argument had failed quite so grandly.<< Disney is supposed to get "special consideration"??? Why, because they have a bunch of politicians in their pocket? (Wasn't the Sonny Bono Copyright Term Extension Act written for Disney, It was also called the Mickey Mouse Act for obvious reasons!) Is Disney supposed to be able to write the laws, and make the rules they get to use. Plus to be able to change them when they feel like it??? >>The appellate judges, who heard the case just last Friday, seemed peeved at Petrocelli, according to reports from people in the courtroom, when he argued that only a handful of documents had been destroyed. An attorney for Slesinger, Hollywood superlawyer Bert Fields, responded by reading a long list of the documents from a master index of those destroyed. << Ah, the famous Disney Spin, well, it was only an handful... I remember that it was tens of thousands, and many legal side file boxes worth, including one file box labeled "Winnie the Pooh - Legal Problems". Yep, a handful, if you are the Jolly Green Giant. And I disagree with JeffG that this case will settle. The Slesinger's have turned down multiple attempts to settle. I think they have decided to roll the dice and go for the whole enchilada. Now, what happens if Disney loses the merchandising rights? I think the Slesinger's would try to get a totally new merchandising rights contract from Disney (Of course, for a higher percentage, plus a much more clearly detailed way in calculating the royalties.) If they couldn't come to an agreement, then the Slesinger's would more than likely hold Disney hostage for a bit. (Which would PREVENT Disney from selling Pooh Merchandise.) Then try again, or sell the rights to another company who would negotiate with Disney. Also, if this case is won by the Slesinger's, and goes to appeal, the court could order many things, including a third party auditor to keep track of current Pooh Merchandise, a court fund where Disney would be required to place disputed royalties into until the appeal is decided, etc. This will be an interesting case, the next ruling should be the Milne 'termination' issue related to the Bono act, and more than likely, Disney will NOT get the court to say that they achieved its goal of taking the rights away from the Slesinger firm.
6	TomSawyer Thu 11/21/2002 10:09p	The American Reporter's bias on this case has been pretty clear from the start - they'll print whatever the Slesinger family press releases are as gospel truth. This isn't really a devastating blow for Disney - it just means Disney has to find another avenue to appeal the hearsay that the Slesingers want admitted as evidence. And I'm sure they'll find it.
7	mrichmondj Fri 11/22/2002 3:33a	>>While losing the Pooh license would be very hard on Disney, it would certainly be >much< harder on the Slesingers if they lost the Disney deal.<< I'm not so sure if that is true. The Slesingers have made millions of dollars already off of Pooh without having to lift a finger. Whether Pooh remains lucrative for the foreseeable future really doesn't change the fact that this family is very well off and can live a very luxurious lifestyle with or without Pooh. In my view, the Slesinger's have nothing to lose. If Disney wins the Pooh trial, they still get a nice sized royalty check without having to lift a finger. If they win the Pooh trial, they can add even greater millions to their family fortune and ensure that future generations of the Slesinger family don't have to work for a paycheck. If Disney loses the case, and the Pooh rights, you can bet there will be hundreds if not thousands of families that will immediately lose their paycheck while the Slesinger family continues to live in the lap of luxury.
8	TomSawyer Fri 11/22/2002 8:20a	Despite what the Slesinger lawyer says, the chances of Disney losing the rights to Pooh are extremely small. Disney owns the rights to Pooh for everything including merchandising - the Slesingers gave those rights to Disney in exchange for a percentage of the sales of some types of merchandise. The questions in front of the court are: 1)what is the merchandise on which Disney must pay royalties to the Slesinger company in exchange for the merchandising rights? 2)Has Disney paid sufficient royalties based on the contract? A crux of the disagreement seems to be that the Slesingers view videotapes and DVDs and even theme park attractions as merchandise, while Disney views those as entertainment akin to movies and books, to which the Slesingers own no rights. The Slesingers say that these things are part of the merchandising of Pooh, but Disney apparently says that they are entertainment offerings and not merchandising. The ruling this week was over whether or not hearsay from the Slesinger family about a conversation with a Disney executive who allegedly told them that the agreement covered these video sales. The judge flat out said that Disney still had good reason to dispute the sanctions on which he was ruling, but that because of a technicality he was forced to throw out the suit. The $200 million that Disney's lawyers have determined as their potential losses would be based on the royalties based on the entertainment offerings on top of the royalties the Slesingers are already getting for the t-shirts, plush toys, etc. The bad thing for Disney is that an executive might have told the Slesingers that the contract included videocassettes. But it was not written down, and that executive is long gone. Disney could very well have been operating all this time along the contract as it was written and signed by both parties.
9	Darkbeer Fri 11/22/2002 9:14a	This is not the first time this has gone to appeal, in fact, the California Supreme Court has already ruled on it by deciding to not hear the case! http://www.monitor.net/monitor /0203a/pooh5.html As for Disney losing the rights, if the Slesingers can prove fraud or breach of contract, then Disney could lose the rights... >>In allowing that amendment, Los Angeles County Superior Court Judge Ernest M. Hiroshige also said that if fraud or breach of contract is proved, the Slesingers can terminate the contract and take their rights elsewhere. An auction in such an eventuality could prove enormously lucrative. << Another big issue is how much money Disney really made off Pooh merchandise, seems like Disney has not kept the best of records, instead just lumping the Pooh merchandise with other Disney stuff. >>No one seems to know how much Disney earns from Pooh and other characters from the Hundred Acre Wood, but the amount has seemed to increase or diminish as the case gets closer to trial, depending on who is asked. Newspaper reports show that Disney chairman Michael Eisner said in 1999 that the cute little bear earned $3.3 billion for the studio, and the Merrill Lynch analyst who follows Disney said in 1999 that the figure would be close to $6.0 billion now. Disney president Robert Iger said in 2000 that the revenues total about $4 billion. << Right now, they are getting another forensic accounting for the trial, which might delay the start of the trial this upcoming March.
10	mrichmondj Fri 11/22/2002 9:16a	>>The $200 million that Disney's lawyers have determined as their potential losses would be based on the royalties based on the entertainment offerings on top of the royalties the Slesingers are already getting for the t-shirts, plush toys, etc.<< Just to clarify, the Disney lawyers contention is that they are not liable to pay any dollar award under the current Pooh contract. The $200M figure was set by the judge this summer in a preliminary ruling. Because this ruling was made, Disney acknowledged that figure to shareholders. However, Disney does not acknowledge this as a legitimate award and will contest it in the forthcoming trial. Additionally, an independent accountant has been appointent by the judge to redetermine if the $200M figure was valid under the current contract.

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