Walt Disney Co. Fined for Destroying Evidence in Winnie the Pooh Case

LOS ANGELES – The Walt Disney Co. was fined $90,000 last year for destroying boxes of documents relating to a dispute over royalties owed on sales of Winnie the Pooh products, court documents unsealed Friday show.

In addition to the fine, a Superior Court judge also ruled that a jury will be told about the destruction and be allowed to draw its own inferences about the evidence those boxes contained.

The sanctions were ordered last August but were revealed Friday after a judge ordered hundreds of pages of documents unsealed at the request of the Los Angeles Times.

A family owned company that receives royalties from the sale of Pooh merchandise claims Disney has withheld more than $35 million by failing to report sales of at least $3 billion in Pooh-related computer software, videocassettes and DVDs featuring the furry bear and his pals from the Hundred Acre Wood.

Disney has claimed the merchandise in question is not covered under its agreement with Stephen Slesinger Inc., which bought the merchandising rights from author A.A. Milne in 1929 and made its first deal with Disney in 1961.

The lawsuit was filed in 1991 and is expected to reach trial later this year.

In his August ruling, Judge Ernest Hiroshige stopped short of ruling that Disney intentionally destroyed evidence, including files marked "Winnie the Pooh-legal problems."

He did say that Disney's destroying of evidence after the lawsuit was filed and its failure to disclose the destruction for 11 months amounts to gross negligence. A jury will be allowed to decide if the destruction was intended to suppress evidence.

Disney maintains the documents had little to do with the Pooh case.

"There is no proof that the documents destroyed were evidence," Disney's lead attorney Daniel Petrocelli said. "These were old meaningless papers destroyed by people in Disney's records management department who had no knowledge of any lawsuit."

The documents belonged to former Disney executive Vincent Jefferds, who headed the company's consumer products division and signed a second agreement with Slesinger's heirs in 1983. Jefferds died in 1992.