Disney Bias In Pooh Royalty
Created 10/31/2002 - 00:00
The long-running litigation over WINNIE THE POOH royalties took a startling turn as accountants hired by the court to audit Disney's records were officially fired on October 25, 2002. Los Angeles County Superior Court Judge Ernest M. Hiroshige had determined that the accountants were biased in favor of Disney and their auditing methods unreliable. He has ordered that a new independent accounting firm be hired. In his ruling, the judge confirmed that Disney's liability on this part of the case could reach "tens if not hundreds of millions of dollars," but asked the new accountants he expects to appoint to review his order and provide recommendations. The plaintiff in the case is Shirley Slesinger Lasswell, the 79-year old widow of licensing pioneer Stephen Slesinger, who teamed up with Pooh author A. A. Milne and illustrator E.H. Shepherd in the 1930s to expand Pooh beyond the confines of his books. After her husband died, Mrs. Lasswell extended Pooh product and service uses in the States. In 1961, she granted Pooh rights to Walt Disney himself, striking a deal that gave Disney all U.S. and Canadian television, merchandising, future media rights and all commercialization. In exchange, Milne and Slesinger were given a percentage of gross revenues generated by Pooh-related products and services worldwide. Disney has since bought out Milne's interest for $350 million. In a separate ruling in June 2001, Judge Hiroshige imposed sanctions on Disney after finding it destroyed thousands of documents in the case. "What shouldn't be lost is that, while this ruling is important, it only pertains to the accounting of the royalty areas in the case that are not in dispute," said Bert Fields, lawyer for the plaintiff. "I believe Disney's liability on the entire case, including the disputed areas, is closer to one billion dollars. Add to that punitive damages and the loss of future Pooh earnings if the royalty agreement is terminated." The larger case is expected to go to trial in March 2003.