LOS ANGELES (Reuters) - Walt Disney Co. will not be able to contest key evidence in a long-running suit over the honey pot of marketing rights to Winnie the Pooh after it destroyed key documents in the case, a California appeals court ruled Wednesday.
The court ruled on a technicality and said that questions on the original decision remained but denied Disney the chance before trial to contest the ruling.
The ruling is part of a bigger court drama over whether the holder of U.S. rights to Pooh, Stephen Slesinger Inc., was shortchanged by Disney over royalties due under a 1983 deal, a case that Disney has said could cost it $200 million.
Slesinger in part says it is owed royalties on all commercialization of Pooh, which is expected to be the subject of a jury trial next year.
A Los Angeles judge had previously ordered Disney to pay $90,000 in lawyers' costs and suffer a number of non-monetary sanctions after destroying Pooh documents. For instance, it was barred from contesting that a Disney executive had promised Slesinger royalties from Pooh videocassettes.
"Disney misused the pre-trial discover process by destroying evidence it knew or should have known was sought by SSI, making false and evasive responses to SSI's discovery, and unduly delaying notification about the records destruction," Appellate Judge Norman Epstein wrote, referring to the decision on appeal.
Disney has argued that the destruction of documents was innocent and routine and contested the sanctions ruling.
But by law, only monetary sanctions could be appealed. Slesinger and its lawyers gave up their rights to the $90,000 in fees, which left Disney with no grounds to object to the original ruling, Epstein wrote in the decision handed down Wednesday.
However, he allowed that the sanctions against Disney could still be revisited in the suit, which in one form or another has lasted more than a decade.
"Questions remain as to the underlying correctness of the sanctions," Epstein concluded, but the appeal was not the appropriate venue for deciding the issue.
A Disney spokesman said his company would continue to challenge the sanctions, while Bert Fields, a Slesinger lawyer, said that it was a tremendously important ruling for his client, ahead of the trial scheduled for next March.
"The jury will be told that certain conversations which we contend go right to the heart of the case were true," he said.
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Disney loses appeal over destroyed Pooh documents
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Disney loses appeal over destroyed Pooh documents 
