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This excerpt taken from the DIS 10-K filed Dec 7, 2005. Stephen Slesinger, Inc. v. The Walt
Disney Company. In this lawsuit, filed
on February 27, 1991 in the Los Angeles County Superior
Court, the plaintiff claims that a Company subsidiary defrauded
it and breached a 1983 licensing agreement with respect to
certain Winnie the Pooh properties, by failing to account for
and pay royalties on revenues earned from the sale of Winnie the
Pooh movies on videocassette and from the exploitation of Winnie
the Pooh merchandising rights. The plaintiff seeks damages for
the licensee’s alleged breaches as well as confirmation of
the plaintiff’s interpretation of the licensing agreement
with respect to future activities. The plaintiff also seeks the
right to terminate the agreement on the basis of the alleged
breaches. If each of the plaintiff’s claims were to be
confirmed in a final judgment, damages as argued by the
plaintiff could total as much as several hundred million dollars
and adversely impact the value to the Company of any future
exploitation of the licensed rights. On March 29, 2004, the
Court granted the Company’s motion for terminating
sanctions against the plaintiff for a host of discovery abuses,
including the withholding, alteration, and theft of documents
and other information, and, on April 5, 2004, dismissed
plaintiff’s case with prejudice. Plaintiff’s
subsequent attempts to disqualify the judge who granted the
terminating sanctions were denied in 2004, and its motion for a
“new trial” was denied on January 26, 2005,
allowing plaintiff to proceed with its noticed appeal from the
April 5, 2004, order of dismissal.
-119-
Management believes that it is not currently possible to estimate the impact if any, that the ultimate resolution of these matters will have on the Company’s results of operations, financial position or cash flows. The Company, together with, in some instances, certain of its directors and officers, is a defendant or co-defendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not expect the Company to suffer any material liability by reason of such actions. -120-
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