Slesinger Family Seeks to Reinstate Billion Dollar Claim Against Disney

Winnie the Pooh Rights' Holders Appeal Lawsuit Termination and $ Windfall for

The Walt Disney Company

May 25, 2005, 01:00 ET from Stephen Slesinger, Inc.

    LOS ANGELES, May 25 /PRNewswire/ -- Stephen Slesinger, Inc., owner of much
 of the licensing rights to the Winnie the Pooh characters, has filed an appeal
 in its long running battle with The Walt Disney Company over claims that
 Disney owes Slesinger $700 million or more in royalty payments spanning 20
 years.  The appeal was filed by the law firm of Howard Rice Nemerovski Canady
 Falk & Rabkin of San Francisco, in the Court of Appeal of the State of
 California, Second Appellate Division, Division 4.
     The appeal is from the decision by California Superior Court Judge Charles
 W. McCoy, Jr. to dismiss the 13 year-old suit because, more than ten years
 ago, an investigator for Slesinger's prior trial attorney had inspected trash
 bins outside Disney offices and found documents related to the controversy.
     Slesinger had agreed in the trial court that it would make no use of any
 document found in Disney's trash by the investigator, and had proposed a set
 of procedures that would have put teeth into this assurance.  These included
 obtaining a new set of trial lawyers who had not seen those documents.
     Jerome B. Falk, Jr., a Howard Rice appellate specialist who is lead
 counsel for Slesinger in the appeal, said: "The trial court's action was
 unprecedented and, I am convinced, incorrect.  Slesinger had agreed to
 procedures that would have assured Disney a fair trial with no use of
 documents from its trash.  Dismissal of the entire case was overkill, and
 deprived Slesinger of its day in court on claims that, even by Disney's public
 estimate, exposed it to hundreds of millions in damages."
     The original lawsuit was filed by Slesinger in 1991, after discovering
 that Disney had repeatedly breached its contractual obligations for several
 years during which it failed to account accurately and pay royalties that it
     As the litigation progressed Slesinger learned that Disney had destroyed
 numerous boxes of files containing evidence relating to the case, including a
 file entitled "Winnie the Pooh Legal Problems."  In a prior order, another
 Superior Court judge had severely sanctioned Disney for this destruction of
 evidence.  The order terminating the case not only erased those sanctions, but
 also relieved Disney of all liability for hundreds of millions of dollars in
 unpaid royalties on Slesinger's breach of contract claim.
     The appeal raises three basic grounds for reversal of the judgment.  The
 first is that California trial judges lack the power to terminate a lawsuit as
 a sanction unless the legislature confers such a power by statute, and that no
 statute authorized the trial court to impose such a sanction in this case.
     The second point made in the brief is that even in those circumstances
 where a statute does authorize dismissal as a sanction, the court cannot do so
 unless the offending party had violated a prior a court order.  In this case,
 there was no court order dealing with trash searches by Slesinger's private
     Finally, the brief argues that under well-established California law,
 terminating sanctions are never permitted unless no sanction short of
 dismissal could remedy the conduct found to have been improper.  A sanction
 that is more severe than necessary confers a windfall on the other party.
 Here, Slesinger had proposed a court order preventing any use of the documents
 and requiring it to obtain new trial counsel who would be screened from seeing
 any of the documents in question.
     As the brief asserts, the terminating sanction "relieves Disney of the
 consequences of its own wrongful destruction of evidence for which Disney had
 been severely sanctioned by another judge before the terminating sanctions
 were imposed on Slesinger."
     Jerome Falk said: "This is a very strong appeal.  The goal of the law is
 to provide the parties with a level playing field so that disputes can be
 resolved on their merits.  Here, Slesinger's strong case on the merits has
 been tossed, not because a jury found that it lacked merit but because of
 something an investigator did more than a decade ago.  As our brief argues,
 the trial court didn't level the playing field, it inappropriately punished
 Slesinger by eliminating the playing field altogether."
     Shirley Slesinger Lasswell, the 83-year-old president of Stephen
 Slesinger, Inc., and widow of licensing pioneer Stephen Slesinger, who entered
 into the original licensing agreement with A. A. Milne in 1931, said, "My
 husband and I built the Winnie the Pooh franchise and then sold the licensing
 rights to Walt Disney himself in 1961. We never expected Disney to breach its
 contract with us. This would never have happened if Walt Disney were still
 alive. "
     All we ever wanted was our day in court," said Pati Slesinger, Shirley's

SOURCE Stephen Slesinger, Inc.