Ovitz’s Accuser Is Challenged

A Yale University law professor was challenged Friday to cite examples supporting his argument that former Walt Disney Co. President Michael Ovitz deserved to be fired and denied a rich severance deal because he allegedly lied and spent lavishly.

Lawyers for Disney directors being sued by shareholders in Delaware Chancery Court argued that Professor John Donohue’s conclusions about Ovitz’s spending and veracity were flawed. The plaintiffs’ lawyers are seeking to recover for Disney $200 million in severance payments and interest.

“In fairness to Mr. Ovitz, to try and defend himself against your opinion that he was dishonest, he needs to know what specific misstatements he supposedly made,” Ovitz attorney Mark Epstein said. “I’m going to ask you now to list for me each and every specific instance.”

Donohue conceded that “it’s hard to find specific examples” in court depositions that Ovitz lied.

He said his conclusion about Ovitz came from statements by Disney executives. In court documents, Chief Executive Michael Eisner and former chief counsel Sandy Litvack made “clear that Ovitz had been a habitual liar,” Donohue said.

Attorneys accused Donohue of ignoring favorable comments other Disney executives had made about Ovitz.

Defense lawyer Stephen Alexander said Disney had authorized such expenditures as a $68,000 home screening room that Donohue had questioned.

He countered Donohue’s testimony that Ovitz violated a $125-per-person spending limit on home entertainment by noting that company guidelines excluded catered events.

A $2-million office renovation blamed on Ovitz included unrelated work, Alexander said.

Lawyers for Disney shareholders contend that directors failed to properly oversee Ovitz’s 1995 hiring and his dismissal in 1996, wasting company assets by giving him a big payout.

Ovitz received a cash-and-stock severance package that plaintiffs lawyers say was worth $140 million when he left. The amount Ovitz actually reaped came to $109 million because some stock options expired.