Disney Treatment of Dying Executive Is Focus of Trial

Trial got underway Tuesday in a federal lawsuit accusing the Walt Disney Co. of pressuring a dying, AIDS-afflicted executive into signing away $2.7 million in benefits by threatening to expose him as a crook.

In his opening statement to the jury, a lawyer for the estate of Robert Jahn charged that Disney officials “took advantage of a weakened and dying man at the worst moment of his life” to get him to surrender his rights to life insurance, deferred compensation, a year-end bonus, accrued vacation time and other benefits.

Attorney Larry A. Sackey also accused one of Disney’s highest-ranking executives, Sanford M. Litvack, of a “rush to judgment” in concluding that Jahn had accepted hundreds of thousands of dollars in kickbacks from corporate vendors.

Jahn, a senior vice president at Disney Motion Pictures & Television Co., was in charge of producing trailers and television spots for the studio’s films. Most of the work was done by outside contractors.

Sackey said the kickback allegations were fabricated by a disgruntled composer who was dropped by Jahn because of poor work.

The contractor, Hopkins B. Hallman II, presented Disney officials with copies of checks totaling $164,000, which he said he cashed and paid to Jahn in exchange for getting work over several years.

Some of the checks contained notations indicating that the proceeds were intended for Jahn, but Sackey said those citations were inscribed after the checks had been cashed.

In his response, Disney’s trial counsel, John B. Quinn, declared that Jahn had confessed his crimes months before his death, telling Litvack, “I want to come clean.”

During a meeting at his Hollywood Hills home with Litvack and another Disney official in November 1993, Jahn admitted taking more than $50,000 in kickbacks from Hallman, Quinn said. The Disney lawyer said Jahn told them he felt so ashamed about his behavior that he took the money with him on trips to New York and passed it out to the homeless.

Jahn then left the room and returned with a cigar box containing what he said was the rest of the payoff money, $10,181 in cash.

Aware that Jahn probably was dying, Litvack decided not to fire him on the spot or refer the matter to the police but instead volunteered to keep him on the payroll so he could continue to receive medical benefits, Quinn said.

Quinn said Jahn’s only wish was that his misconduct be kept secret from his mentor, Disney executive Jeffrey Katzenberg.

In addition to the kickbacks that he allegedly took from Hallman, Quinn said, the company has evidence that Jahn solicited payoffs from other vendors.

The suit against Disney, filed by Jahn’s executor, Evan Rothberg, was thrown out previously by a Los Angeles federal court judge. But an appeals court reinstated the suit because the circumstances involving Jahn’s surrender of his rights were suspect.

Three weeks before Jahn’s death in May 1994, Gerald Swider, a Disney audit manager, visited him in his hospital room and obtained a signed waiver of benefits. No witnesses were present, and Jahn was not given a copy of the document.

Sackey told the nine-member jury Tuesday that Jahn was confused, disoriented, despondent and almost blind when he signed the document.

But Quinn said the defense will show that the late Disney executive was alert and receiving a minimal dosage of drugs.

The issue of undue influence is at the heart of the case, U.S. District Judge Dean D. Pregerson told jurors as the trial began.

As defined by the courts, undue influence involves two elements: undue susceptibility by the weaker party and excessive pressure by the stronger party.

In sending the case back to the district court for trial last year, the U.S. 9th Circuit Court of Appeals observed that the first condition was plainly met because Swider visited Jahn while he was “on his deathbed, suffering grievously from several ailments he knew to be terminal and very fearful that Disney might expose information that would destroy his reputation.”

Whether Swider applied excessive pressure on Jahn to sign the waiver is another matter, the three-judge panel said.

“The defendants have amassed a substantial amount of evidence suggesting that Swider not only exerted no improper pressure, but went out of his way to accommodate Jahn’s demands,” the judges said. “Only Swider and Jahn, however, know for sure. Inferences supported by the record can be drawn either way.”