Expert Backs Firing Ovitz, Defends Payout

Walt Disney Co. had “a lot of good reasons” to fire Michael Ovitz from his job as president, but none were good enough to justify a for-cause firing, an expert for the company’s board of directors testified Friday.

California employment lawyer John Fox is expected to be one of the last witnesses in the trial of a shareholder lawsuit challenging Disney’s 1996 decision to terminate Ovitz with a severance package that plaintiffs’ lawyers value at $140 million. Shareholders allege that Disney’s board was lax in reviewing Ovitz’s employment contract and in failing to fire him for cause for alleged dishonesty and insubordination to Disney Chief Executive Michael Eisner, the longtime friend who recruited him.

Fox is the second defense expert to say there is no evidence Ovitz was guilty of dishonesty or other conduct that would meet the standard of gross negligence or malfeasance. Without such proof, Disney probably would have faced a lawsuit from Ovitz for defamation, fraud and breach of contract, an action that would have exposed the Burbank-based entertainment giant to hundreds of millions of dollars in damages, both defense experts said.

“Disney would have lost,” Fox said Friday.

The week’s testimony has featured a debate among experts over whether Disney is entitled to recover the severance pay from Ovitz, Eisner or allegedly negligent Disney directors.

Fox’s firm has billed close to $400,000 for its work as an expert witness for Disney’s directors, the lawyer said Friday. Larry Feldman, a California trial lawyer who served as an expert for Ovitz, estimated he had spent 140 hours to 150 hours on the case at $725 per hour.

Shareholder expert John Donohue, a Yale Law School professor, is being paid $500 a hour for his work on the case, a shareholders’ attorney said.

Donohue is slated to return to the stand next week.

A decision from Delaware Chancery Court Judge William B. Chandler III is not expected until months after the trial ends.