Disney suffers setback

(Daily News, April 22, 2000)

BURBANK - In another legal blow to the house of Mickey Mouse, a federal jury ruled Friday that the Walt Disney Co. coerced a dying executive into forfeiting his valuable company life insurance policy, accrued vacation time, a cash bonus and other benefits.

``It's a moral victory. This is the appropriate verdict,'' said Larry Sackey, an attorney for the estate of the late Robert Jahn, a senior vice president who worked for nine years at Disney Motion Pictures & Television Co.

``I hope this corporation gets the message. It shouldn't conduct business like this.''

The suit claimed that Jahn - a disoriented 54-year-old executive lying in his hospital deathbed, his body ravaged by AIDS - was threatened with being exposed for taking kickbacks unless he signed away millions of dollars in benefits.

He had no attorney by his side, and no loved ones to protect him, the suit said. Three weeks later, he died.

U.S. District Judge Dean Pregerson will decide later how much Disney owes. The benefits alone total about $2.2 million.

Jahn, who died in May 1994, reportedly left some of his money to his father and a sister of his late male companion. Most of whatever comes out of the lawsuit will go to charity, lawyers said.

But if Disney gets its way there won't be anything to distribute.

``I do not believe they are going to get any money at all,'' said Disney lawyer John Quinn. ``The fact is that the jury found that we relied on a promise that (Jahn) made (to give up his benefits), and that's the end of the case.''

Jahn's lawyers disagreed.

``We don't believe it will impede the amount of damages we will receive,'' Sackey said. He quickly added: ``This is not a case about money. This is a case about making a point.''

During the two-week trial, witnesses called by Disney argued that Jahn had agreed to waive the benefits before his death to avoid being fired for taking kickbacks.

They insisted Jahn bilked the company out of $5.7 million by allowing subcontractors to overbill for services. They charged he illegally funneled more than $300,000 to his companion by forcing one of the vendors to hire the man at an inflated salary.

Jahn should have been fired, and ``would have been fired'' and handed over to police if he had not been sick, Quinn told jurors before the verdict.

Disney was showing compassion, Quinn said. The company kept the scandal quiet to save a dying man's reputation and allowed him to stay on the payroll so he could receive medical benefits. In exchange, Quinn contended, Jahn agreed to sign away his other benefits.

But the jurors unanimously rejected Disney's case in favor of the tragic story line told by the plaintiffs' lawyers - the gut-wrenching saga of an AIDS-stricken employee who was robbed by the greedy company he loved.

Lawyers for Jahn's estate denied he ever took kickbacks. Jurors agreed, after listening to witnesses who testified that Jahn worked tirelessly to produce movie previews and television commercials for the studio's movies, mostly family films.

Disney attorneys pointed to a finding by the jury that the company ``justifiably (relied) to its detriment on a promise by Robert Jahn to give up his nonmedical benefits.'' Jury forewoman Michele Antonatas said panelists were confused by the language contained in the finding, which is nonbinding, but clarified that she and the seven other jurors intended to deliver a verdict for the plaintiff.

``Disney had no right to deny Mr. Jahn those benefits,'' the Long Beach accountant said.

A federal judge once dismissed the lawsuit amid concerns about the kickbacks. But a federal appeals court reinstated the suit in January 1999. The court ruled that the circumstances of the deathbed waiver - including Jahn's frailty and the money Disney stood to gain - raised a possibility that Disney exerted excessive pressure to get the deal done.

The appeals court noted that there were no witnesses to the waiver, that Jahn had not consulted his attorney, and perhaps most important, that Disney knew its former employee was ``desperate to avoid further disclosure of his alleged professional misconduct.''

A jury should be allowed to decide whether the waiver was legal and binding, the appeals court said.

``This is a total victory for us,'' said Gregory Hafif, another lawyer for Jahn's estate. ``Disney forced Mr. Jahn, who had only weeks to live and was weakened by this terrible disease, to do something he didn't want to do - something he didn't have to do.''

Disney was on the losing end of another high-profile case last spring when a court referee said the company breached its fiduciary duty and owed former studio chief Jeffrey Katzenberg millions of dollars.

That case was highlighted by Chairman Michael Eisner's admission that he might have aimed the statement ``I hate the little midget'' at Katzenberg, who said he was owed $250 million.

The two sides settled without disclosing how much money Disney paid to Katzenberg.