Disney Seeks to Recoup Court Costs From Pooh Royalties Case

Nearly a year after winning a hard-fought battle over Winnie the Pooh royalties, Walt Disney Co. wants its longtime adversaries to pay more than $1 million in court-related costs that the Burbank-based entertainment giant incurred to prepare and present its case.

In a hearing this afternoon, Los Angeles County Superior Court Judge Carolyn Kuhl is scheduled to consider Disney’s request to recoup $1,083,057 from the heirs of Stephen Slesinger, a New York literary agent who, in 1930, acquired Pooh merchandising rights from author A.A. Milne.

Among other things, Disney seeks to be reimbursed for the $803,528 it paid to accounting experts, court-appointed mediators and referees during the case that began 14 years ago.

Court documents show that the company is demanding repayment of some of its expenditures down to the last penny. For example, the company seeks $16,257.01 it spent serving subpoenas, including ones to several “high-risk” witnesses the company considered to be “potentially dangerous.”

State law provides for prevailing parties to recover some court-related costs. However, lawyers representing the Slesinger heirs plan to argue that Disney’s request goes far beyond what the law allows.

In particular, the Slesinger family has chafed at Disney’s assertion that it should be repaid the $151,415.27 it spent to manufacture elaborate display panels it used to make its case. Disney’s attorneys referred to the large visual aids during a hearing last year to show how Slesinger-hired ruffians rifled through Disney’s trash and stole confidential papers related to Pooh.

Dozens of the display panels featured oversize reproductions of key documents. Some boards spotlighted color photographs of trash bins outside eight Disney buildings in Burbank and Glendale.

“The Walt Disney Co. is an entertainment company and they brought certain production values to their presentation,” said Steven Sherr, an attorney representing the Slesinger family. “While aesthetically pleasing, the law says that you can only recover what’s reasonable and necessary.”

Disney’s attorney, Daniel Petrocelli, declined to comment. Court papers filed by Disney dismissed protests by the Slesingers and their attorneys, saying: “None of these arguments have merit.”

Seventy-five years ago, Stephen Slesinger, a pioneer in the business of marketing cartoon characters, paid Milne $1,000 for merchandising rights to the honey-loving bear and his forest friends. In 1961, Slesinger’s widow, Shirley Slesinger Lasswell, granted Disney the rights in exchange for royalties.

In 1991, Lasswell and her daughter, Patricia Slesinger, sued Disney, claiming the company had cheated them out of hundreds of millions of dollars in royalties for the sales of videotapes, computer software and other Pooh products. The dispute lasted more than a decade but never made it to trial.

In March 2004, Los Angeles County Superior Court Judge Charles W. McCoy ended the case. After a weeklong hearing, McCoy found that the Slesinger family had tried to gain an upper hand by stealing confidential Disney documents and then lying and altering the papers to cover up the theft.

The Slesingers have appealed McCoy’s decision. Meanwhile, in a separate lawsuit in federal court, Disney is seeking to have the family’s lucrative rights terminated entirely.

That Disney is being so penny-conscious now is notable, considering the huge amount of money the company saved by winning the case. Had the Slesingers’ claims been proved, Disney could have lost “several hundred million dollars,” the company acknowledged in a 2002 regulatory filing.

Disney lawyers are arguing, however, that the reimbursement issue is about more than money. In effect, the company asserts that by slapping the Slesingers with a bill, the court will be delivering a message about the family’s conduct.

“As the prevailing party, Disney is entitled ‘as a matter of right’ to an award of its costs both to defend this lawsuit and to protect itself from [the Slesinger family’s] abuse of the legal process,” says one pleading.

But Sherr, the Slesingers’ attorney, says today’s hearing has less to do with conduct than with what costs can be considered reasonable.

Sherr has objected to several amounts, including $8,320 Disney says it spent to serve two subpoenas upon one witness, an “ex-convict,” according to court documents, who had been hired by the Slesinger camp to dig through Disney’s trash.

And then there is the issue of the costs of Disney’s elaborate courtroom displays. Disney says in its pleadings that it actually spent more than $277,000 to create and design 322 enlarged graphics for use in court. Because only 129 of those were used, court documents say, Disney is asking to be reimbursed only $151,415.

Such a pull-out-all-the-stops display might have been warranted, Sherr said, if Disney’s audience had been an “audience in a theater” or even a jury.

“But here you had a judge and some lawyers in the courtroom,” he said. “It’s Disney’s right to use some of these exhibits, but it’s an entirely different matter to have someone else pay for it.”