Lawyers fire final shots in $140m Disney pay-off case

Whatever reasons Walt Disney thought they had to fire Michael Ovitz, they were not good enough to send him away without $140m in severance, the Delaware chancery court heard on Friday.

John Fox, an employment lawyer from California, said none of the former group president's failings during his brief stint at Disney in the mid-1990s rose to the level of the gross negligence or malfeasance stipulated in his contract if he were to be sacked summarily.

Mr Fox was testifying for the former company board that stands accused by shareholders of neglecting its duty in hiring and firing the one-time talent agent on such generous terms.

He agreed with Larry Feldman, who gave evidence earlier on behalf of Mr Ovitz, saying Disney had taken the prudent course.

A "for cause" dismissal would have landed Disney with a "very serious and ugly lawsuit for fraud, defamation and wrongful dismissal", Mr Feldman said, and would have cost it hundreds of millions of dollars.

Mr Feldman is a seasoned campaigner in Hollywood employment cases, with a reputation for winning substantial damages for aggrieved entertainment industry executives.

Both men conceded that Mr Ovitz had done poorly in his efforts to prove himself a worthy successor to Michael Eisner, chairman and chief executive, who last year lost the chairmanship after shareholders rebelled over corporate governance practices at the company.

Their evidence contradicted John Donahue's, a Yale law professor testifying as an expert for investors.

He is due to appear again on Wednesday to rebut their claims in a last appearance before William B. Chandler, the judge, retires to mull thousands of documents and almost three months of transcripts.

Mr Chandler, who had planned for four weeks in court, pushed the hearing into high gear as last week drew to a close, recessing on Friday at 7.30pm after a 10½-hour marathon during which Mr Fox clashed repeatedly with Steven Schulman, the plaintiffs' main lawyer.

Mr Fox held firm as Mr Schulman reminded him that former Disney directors had testified that Mr Ovitz had been "a total failure", "like a cancer", and "fundamentally destructive to the core values of the company".

He said while Mr Eisner had written notes alleging that Mr Ovitz lied habitually, there had been no evidence in any of the testimony of specific examples.

Mr Schulman responded that if Mr Ovitz had brought a wrongful dismissal lawsuit, it would have gone to trial without the eight-year delay before the current hearing started, and that Mr Eisner would have given "different testimony".

Mr Fox, who said he had billed his clients for about $400,000, defended Mr Ovitz's contract with its generous provisions, as "typical" of agreements for top-rank executives whose chances of success could depend on being allowed the latitude to take risks without fear of being summarily dismissed.

Asked for the "real reason" for Mr Ovitz's dismissal, Mr Fox blamed "personality issues - part of the human condition".

"Team building" and helping "large personalities" to fit into new environments were a full-time challenge for many chief executives, he said.

At Disney, he said, Mr Eisner had made the judgment that the company would be better off without its misfit president, and decided to "bite the bullet".

"When you strip away all the glitz and glamour, at the root bottom this is a simple failed performance expectation case," Mr Fox said.

Mr Donohue said earlier in the week that he was as firmly convinced as on his first visit last October, that Mr Ovitz should have been fired for cause.

There was "good and sufficient basis" for sending him away without severance, including ample evidence showing he did not follow Mr Eisner's orders.