Article Stirs Dispute on Disney Documents

A dispute over documents, ignited by an article in The New Yorker, erupted this week in the trial over the severance package of Michael S. Ovitz, the former Walt Disney Company president.

Shareholders have sued Mr. Ovitz and Disney in Delaware Chancery Court over the $140 million severance he received in 1996 after 14 months on the job.

The shareholders have argued that he did nothing to earn the money and that Disney could have avoided paying it by firing him for cause.

In court documents, lawyers for shareholders said the article in last week's New Yorker turned up information never revealed in years of preparation for the case, items that suggested witnesses told one story in court and another elsewhere.

For example, the article said that Mr. Ovitz remembered Disney's chief executive, Michael D. Eisner, laughing at his worry that Disney's board of directors might not approve Mr. Ovitz's hiring as president.

According to the article, Mr. Ovitz recalled Mr. Eisner "ticking off the various ways that board members were beholden to him, and assuring Ovitz that they would do what he wanted."

That could be a pivotal point in the lawsuit, which includes accusations by shareholders that Disney directors neglected their duty to scrutinize the hiring of Mr. Ovitz.

Specifically, shareholders were looking for a note from Mr. Eisner to Mr. Ovitz dated in January 1996 and a seven-page letter Mr. Ovitz wrote to Mr. Eisner six months later.

A lawyer for the shareholders, Steven Schulman, said at a court hearing Tuesday that he had called the writer of the article, James B. Stewart, who told him that he did not have the documents, but that they had been shown to him or read to him.

Mr. Schulman said Mr. Stewart did not say who had shown him the documents, and Mr. Schulman said he did not ask.

Chancellor William B. Chandler III of the chancery court rejected the shareholders' request to interrogate Disney officials over the documents. He did, however, order Disney to have its document custodian swear in an affidavit that the company had looked for and could not find the documents that Mr. Stewart said he saw.