Ovitz Seeks to Be Excused From a Disney Suit
By RITA K. FARRELL
Published: September 9, 2004
WILMINGTON, Del., Sept. 8 - A lawyer for Michael S. Ovitz, the former president of the Walt Disney Company, argued Wednesday that his client should be excused as a defendant in a lawsuit that contends that the $140 million buyout of Mr. Ovitz's five-year contract violated Delaware law.
The suit, filed by shareholders in 1997, accuses Disney's board, its chief executive, Michael D. Eisner, and Mr. Ovitz of breaching their fiduciary responsibilities.
Mr. Ovitz's lawyer, Mark Epstein, argued on Wednesday that his client had no fiduciary duty when his contract with the buyout terms was drafted because he was not a Disney employee at the time.
And when his relations with Disney soured over the course of his 14-month employment, Mr. Ovitz's no-fault termination was negotiated at arm's length with Mr. Eisner; Disney's general counsel, Sanders Litvack; and others, Mr. Epstein said.
But Sidney Schulman, a lawyer for the plaintiffs, said that Mr. Ovitz, who joined the company after 20 years as a Hollywood agent and power broker, orchestrated his departure with Mr. Eisner, his longtime friend, and that rather than being removed from the negotiating process, Mr. Ovitz "was in the middle of it."
A four-week trial in the suit is scheduled to begin on Oct. 18, and Judge William B. Chandler III of Delaware Chancery Court promised to rule promptly on Mr. Ovitz's request to be dropped as a defendant.
In a preview of the trial, Mr. Schulman said Wednesday that the Disney board was the most "derelict, consciously neglectful board in the history of Delaware annals." Delaware law says directors cannot be faulted for bad decisions, only uninformed ones. According to Mr. Schulman, the full Disney board spent less than 10 minutes on Mr. Ovitz's contract in September 1995 before approving it.
In an interview after the hearing, Mr. Schulman said the plaintiffs hoped to recover "in excess of $200 million including interest" but that without Mr. Ovitz as a defendant, "the case without the person with the money would have far less appeal."
"He's integral in terms of proving the case and paying a judgment," Mr. Schulman added.
Mr. Eisner's lawyer, Gary Naftalis, declined to comment except to say "We'll get our chance" next month.
By RITA K. FARRELL
Published: September 9, 2004
WILMINGTON, Del., Sept. 8 - A lawyer for Michael S. Ovitz, the former president of the Walt Disney Company, argued Wednesday that his client should be excused as a defendant in a lawsuit that contends that the $140 million buyout of Mr. Ovitz's five-year contract violated Delaware law.
The suit, filed by shareholders in 1997, accuses Disney's board, its chief executive, Michael D. Eisner, and Mr. Ovitz of breaching their fiduciary responsibilities.
Mr. Ovitz's lawyer, Mark Epstein, argued on Wednesday that his client had no fiduciary duty when his contract with the buyout terms was drafted because he was not a Disney employee at the time.
And when his relations with Disney soured over the course of his 14-month employment, Mr. Ovitz's no-fault termination was negotiated at arm's length with Mr. Eisner; Disney's general counsel, Sanders Litvack; and others, Mr. Epstein said.
But Sidney Schulman, a lawyer for the plaintiffs, said that Mr. Ovitz, who joined the company after 20 years as a Hollywood agent and power broker, orchestrated his departure with Mr. Eisner, his longtime friend, and that rather than being removed from the negotiating process, Mr. Ovitz "was in the middle of it."
A four-week trial in the suit is scheduled to begin on Oct. 18, and Judge William B. Chandler III of Delaware Chancery Court promised to rule promptly on Mr. Ovitz's request to be dropped as a defendant.
In a preview of the trial, Mr. Schulman said Wednesday that the Disney board was the most "derelict, consciously neglectful board in the history of Delaware annals." Delaware law says directors cannot be faulted for bad decisions, only uninformed ones. According to Mr. Schulman, the full Disney board spent less than 10 minutes on Mr. Ovitz's contract in September 1995 before approving it.
In an interview after the hearing, Mr. Schulman said the plaintiffs hoped to recover "in excess of $200 million including interest" but that without Mr. Ovitz as a defendant, "the case without the person with the money would have far less appeal."
"He's integral in terms of proving the case and paying a judgment," Mr. Schulman added.
Mr. Eisner's lawyer, Gary Naftalis, declined to comment except to say "We'll get our chance" next month.