Katzenberg-Disney Suit Opened to the Public

The next phase of former Walt Disney Studios Chairman Jeffrey Katzenberg’s breach-of-contract lawsuit against the studio, which will determine how much money Disney owes, must be open to the public, a Superior Court judge ruled Thursday.

Judge John W. Ouderkirk also ordered that sealed documents in the case be opened, but gave Disney lawyers until April 29 to make a case on a document-by-document basis to keep some of them under wraps.

In making his orders, Ouderkirk spurned arguments by Disney, which has sought to keep the matter closed. The decision may put pressure on Disney to settle rather than risk exposing its business plans.

Katzenberg originally sued in 1996, alleging Disney owed him at least $250 million as part of a 2% incentive bonus he was to receive on income from projects put into production during his 10-year reign as Disney’s studio chief.

That requires, for example, compiling projections on future TV and video income for such films as “Beauty and the Beast” and “Sister Act,” as well as money expected to be reaped from new technologies.

Disney and Katzenberg reached a partial settlement of the lawsuit in 1997, agreeing to a separate procedure later to decide exactly how much Katzenberg would receive.

Both sides had agreed to hold the second phase of hearings, which begins today, in private at their respective law offices, refereed by a retired judge.

But attorneys representing Daily Variety and the Los Angeles Daily Journal -- joined by The Times, Dow Jones and Time Inc. -- argued that there was nothing so compelling that it required the hearing be conducted behind closed doors.

“The sky isn’t going to fall” if some of the issues and documents about movies made under Katzenberg at Disney are revealed publicly, said lawyer Pierce O’Donnell, who represented the media organizations.

Disney, which itself is in the news business through ABC News, argued that the news organizations moving to open the hearing have “little interest in the issues other than titillating the public with gossip and tales of corporate infighting in their commercial publications.”

Disney also argued that information to be revealed “is extraordinarily sensitive and confidential. Succinctly stated, it is the blueprint or “game plan” (including the detailed “play book”) for Disney’s success in the next five to ten years.

Among the things that could be revealed, Disney argued, was which films Disney planned to release and when it would release them. Disney argued that the information would allow competitors to time their own movie releases and adjust their film investment strategies.

But lawyers for the media organizations noted that much of the information is routinely known by competitors.

Katzenberg lawyer Bert Fields, although not actively arguing to keep the hearing open, made it clear that Katzenberg’s lawyers believe there would be no harm done by opening the hearing.

“We have nothing to hide,” Fields said.

Disney said it was satisfied with the ruling because it allowed the company to raise secrecy issues on a case by case basis.