Lawyers, Tiggers & Bears, Oh, My!

An 80-year-old grandmother’s lawsuit has threatened to yank Winnie-the-Pooh out of Disney’s Magic Kingdom. It’s a doozy of a case, full of bluster and hullabaloo—the kind that comes of liking money so much. A bedtime story in ten chapters
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I. In Which We Are Introduced to Winnie-the-Pooh and Some Lawyers, and the Stories Begin

HERE IS EDWARD BEAR, known to his friends as Winnie-the-Pooh, sitting upright in an office chair at a Century City law firm. A lawsuit has been filed against the Walt Disney Company. The lawsuit sometimes makes Pooh feel like he’s been dragged down the stairs, bump, bump, bump, on the back of his head, and sometimes it’s hard to know if it is Walt Disney that Pooh feels dragged by or if it is someone else. Maybe the lawsuit is a bother and there is another way if only Pooh could stop bumping for a moment and think of it.

As Pooh tries to give his mind to the matter, Bertram Fields—the man who calls himself Pooh’s lawyer—appears in the 20th-floor conference room of Greenberg Glusker Fields Claman Machtinger & Kinsella, where Pooh happens to be sitting. “Hello, ladies,” the fearsome Hollywood litigator says to four women who sit around a circular table. Fields turns to a fifth chair, the one occupied by the huge stuffed bear. “Hello, Pooh,” he says.

Pooh and Fields have something in common: They are septuagenarians, which is a long, difficult word that means they are Very Old. It was in 1926 that the British writer A.A. Milne first published Winnie-the-Pooh, which introduced Christopher Robin, Piglet, Eeyore, and other residents of the 100 Aker Wood. In 1928 came The House at Pooh Corner, which offered ten more stories about the beloved characters who talk in Capital Letters, make up silly poems, and misspell words in the nicest sort of way By 1929, when Fields-the-Lawyer was born, Winnie-the-Pooh had already celebrated his third birthday.

Things have changed a lot for Pooh since then. He’s visited a lot of countries (dozens), made a lot of money (billions), and met a lot of attorneys 07, if he remembers correctly). There have been lawsuits (two) and accountants (seven), and sometimes Pooh feels like he’s the bottom of a confused heap of everybody on the ground.

Fields never seems confused. He is a dignified, slender fellow—the sort who must do a lot of Stoutness Exercises—and when draped in charcoal pinstripes, like he is today, he looks awfully like Someone to Be Reckoned With. A Harvard Law School graduate, Fields has had many clients with names that Pooh, were he paying attention, would definitely know. Names like Hoffman and Beatty and Cruise. Names like John, Paul, George, and Ringo. Names like that. In 40 years, Fields has never lost a trial, and he has worked for every movie studio in town except one: Disney. Fields likes to sue the Walt Disney Company, and everybody knows the story of the last time he did it. It was 1999, when Michael Eisner, Disney’s CEO, admitted under oath that he’d called Jeffrey Katzenberg (the former Disney executive who today puts the K in DreamWorks SKG) “the little midget.” Several weeks later, when Disney settled with Katzenberg for reportedly more than $250 million, it was such a big Tra-la-la that for a moment even Pooh stopped humming a hum.

Now Fields says he works for Pooh, though his client in this case is really Shirley Slesinger Lasswell, the tiny, 80-year-old grandmother in the royal blue suit who today sits across the table from the huge stuffed bear. “The Pooh Lady,” as she’s been known for most of her life, owns the U.S. and Canadian merchandising, TV, and radio rights to Pooh and his friends. A very long time ago now, in 1961, she licensed those rights to Disney, and the royalties she’s been paid since have made her rich, as in, she has Umty-tiddly Umty-too amounts of money.

In 1991 the Pooh Lady went to court to try to get Disney to pay her more (by last count, at least $200 million more). It seems to Pooh that the shouting hasn’t stopped since. Depending on who is shouting, and sometimes Pooh has trouble keeping track, he and his friends generate anywhere from $1 billion to $6 billion a year in revenue for Disney That even rivals what Mickey Mouse makes and represents perhaps as much as a quarter of Disney’s $25 billion annual operating revenue. Which helps explain why Disney executives get so bothered when Fields claims that if he proves his case, the Pooh Lady can terminate Disney’s Pooh license. If Fields is correct, the Pooh Lady could grant some other Multimedia Conglomerate the right to sell Pooh T-shirts, sheets, toys, stuffed animals (known as plush), and thousands of other Things. Pondering that makes Disney executives Very Sulky indeed.

There are two pots of money to fight over. In one pot is revenue from merchandise on which Disney agrees royalties should be paid. The Pooh Lady says she’s getting cheated on her part of that pot. Disney says she’s Wrong in the Head. In another pot is revenue from sales of Pooh-related videocassettes, DVDs, computer software, and theme-park attractions. Disney says that’s not merchandise, so the Pooh Lady deserves no royalties. The Pooh Lady says to believe that, she would have to be Foolish and Deluded and have no brain at all.

For years the Pooh Lady drove a Cadillac sporting the license plate POOH-1. To this day she sleeps in Pooh pajamas and hands out Pooh ballpoint pens to people she likes. Whenever she throws a party, she sets a place for Pooh at the head of the table—much like the place he’s sitting at now.

The Pooh Lady, who wears large, diamond-studded teddy bear earrings, looks at her lawyer. “I told Pooh we were going to be talking about him. He wanted to come along,” she says, explaining why she brought a stuffed animal the size of an eight-year-old child with her to Century City. The Pooh Lady always talks this way about the bear—as if he were real.

She’s right, of course. In Los Angeles, where fame, fortune, and a big-name attorney are markers of success, Pooh is a Player. But there’s more than that driving this Story, just like there’s more than a boy, a bear, and a bouncing tiger that keeps us reading about Pooh. Listen closely, for the Pooh Lady’s lawsuit—which is currently the oldest active case on the Los Angeles County Superior Court docket—can teach us one of Pooh’s most cherished lessons: The surest way to Get Lost is to Get Complicated.

II. In Which the Sun Shines on the Pooh Files

RIGHT IN THE CENTER of downtown Los Angeles is a place that resembles nothing so much as a Very Deep Pit. To get there you board an elevator and ride three floors down to a dusty, airless basement called the Los Angeles County Superior Court Archives. It is here that the 44-volume court file for the Pooh Lady’s lawsuit fills n tattered cardboard boxes, each one packed with arguments over what Pooh is worth.

As Pooh understands it, his value to Disney has a lot to do with something called Synergy. Pooh thinks about Synergy by imagining the Walt Disney Company as a forest. There’s a tree for each Disney-owned movie studio, home video and cable operation, TV network, theme park, and retail store, and many of the trees are in bloom. There are trees full of Hundred Acre Wood Minute Maid Juice Boxes and Kellogg’s-Disney Hunny B’s cereal. There are trees laden with McDonald’s Tigger Movie Happy Meals and Winnie-the-Pooh Band-Aids. Each tree makes a loud buzzing noise that says, “Buy me!” But when Synergy is really working, the trees join together to fill the forest with gentle sounds, which all seem to be whispering to Pooh and everyone else, “Don’t go to Warner Bros. stores. Don’t watch DreamWorks animation. Don’t visit Universal Studios Hollywood or Knott’s Berry Farm. Shop Disney.”

Those trees, or trees very much like them, are discussed at length in the file titled Stephen Slesinger Inc. v. the Walt Disney Company. To review this file takes days and days and makes even a patient bear feel like his head has gotten stuck in a rabbit hole. Pooh has been stuck before, back when he ate too much honey and became, to use his own words, a Wedged Bear in Great Tightness. But even Pooh can see that Superior Court File No. BC022365 reveals much more than the tale of one bear. The newly opened court record, which Disney lawyers fought for more than a decade to keep sealed, allows visitors to wade into a Treacherous and Little-Explored Place: the Swamp of Hollywood Accounting.

Pooh is no accountant, but he’s been around Hollywood long enough to know that its bookkeeping practices are often odd, as if twice 12 didn’t make 24. The resulting Swamp threatens all who come near with the kind of Sudden and Temporary Immersion that makes it difficult to keep one’s Head Above Water. It is so difficult, in fact, that when someone excels at Above-Water Head-Keeping, it’s always the talk of the forest. No one can forget the columnist Art Buchwald, who had (with a cowriter) thought up the 1988 Eddie Murphy movie Coming to America. The film grossed more than $300 million, while Paramount Pictures claimed an $18 million net loss. Buchwald sued, alleging he was Snookered. (Paramount settled, paying $900,000.) But these disputes come up all the time—with big-grossing movies like Forrest Gump, for example—and they all boil down to a Simple Truth. Whether you’ve written a movie for or licensed a character to a large media company, you must rely on that company to keep an accurate tally of what it earns. Did Disney keep an accurate tally of Pooh’s income? That’s what the Pooh File is all about. There are documents that compare Pooh’s clout as a celebrity endorser to that of Cheryl Tiegs, the model, and Arnold Palmer, the golfer. Pooh’s status as a commodity is likened to everything from chopsticks to BMWs. There are copies of tie-in agreements with candy vendors who want Pooh to help sell Milky Ways and Starbursts. There are reports that describe how Disney’s international subsidiaries track their Pooh revenue (in Greece it is done manually, without computers). There are lots of documents in the court file, but there are also lots missing. That’s because after the Pooh Lady sued, Disney destroyed hundreds of boxes of its internal records, including an especially interesting-sounding file called “Winnie-the-Pooh, legal problems.” Judge Ernest M. Hiroshige has ruled that Disney acted in Bad Faith, which doesn’t sound so good; he has fined Disney $90,000 and has issued an injunction against the destruction of anything else.

Slesinger v. Disney is really not a complex dispute. But you wouldn’t know it from the Pooh File. In one hearing transcript, a court-appointed referee accuses Disney of not knowing exactly who its sublicensees are and compares the accounting and discovery process to “shoveling smoke.” Disney’s lawyers, meanwhile, maintain that the Pooh Lady’s complaint “presents only a string of unsupported legal conclusions and shibboleths” (a word that, whatever it means, Pooh thinks is fun to say over and over again until his tongue gets all tangly).

Shibboleths or no, Disney is facing a court that seems increasingly Persnickety. The referee in the case got so steamed about Disney’s delays at a 1994 hearing that he Blew His Top: “Disney is going to produce everything they have if we have to get Eisner down here to put some push behind this…. I don’t care what it costs. It can cost millions, maybe. I don’t care.” That was eight years ago. Think of how Peeved he must be today.

Then, last year, Judge Hiroshige decreed that if the case goes to trial, the jury will be instructed that Disney not only destroyed evidence that it knew or should have known the Pooh Lady wanted but made “false and evasive responses” to the Pooh Lady’s requests and delayed disclosing its document destruction for 11 months. A jury instruction like that is tantamount to placing a skunk in the jury box. Disney’s lawyers will have to work hard to distract jurors from the stench.

A trial date has been set for March 2003—a dozen years after the Pooh Lady first went to court. An audit of “Pooh revenue” that cost $1 million to conduct is in dispute, witnesses have died, and as the lawsuit goes on and on, rather like this sentence, it makes even Very Brainy People shrug in a what-shall-we-do-now kind of way.

Pooh enjoys a smackarel of honey, and he knows what it’s like to have 14 pots and wish they were 15. Still, for the life of him he cannot see why the Pooh Lady and Disney have gone to such a Gloomy Place. Quite-between-ourselves-and-don’t-tell-anybody, Pooh feels like the rope in this High-Stakes Tug-of-War. Both Disney and the Pooh Lady claim the bear as one of their closest friends-and-relations. Both Disney and the Pooh Lady have a stake in Pooh’s continued reign as the World’s Best-Loved Piece of Plush. And both Disney and the Pooh Lady have lost sight of what Pooh is All About.

The battle for Pooh, then, is much more than a mad grab for money It is a fable, much like the Pooh stories themselves, about the importance of Not Overthinking, the dangers of Taking Self Too Seriously, and the folly of Forcing a Childlike Bear to Act Grown-Up. “Pooh,” Christopher Robin asks at the end of The House at Pooh Corner, “Promise you won’t forget about me, ever. Not even when I’m a hundred.” In all these years Pooh hasn’t forgotten, and the marketing geniuses at the Walt Disney Company have made sure none of the rest of us have, either. Yet what has fallen out of many people’s heads, even heads Very Worldly and Sophisticated, is the memory of What It Means to Be Pooh.

Who would have thought that a bunch of Woozles with law degrees would be the ones to help us remember? But as Pooh has found out, sometimes when you’ve misplaced What Really Matters, facing who you’re not leads you back to who you are.

III. In Which We Meet Disney’s Lawyer, Who Says the Pooh lady Has Made an Awful Mistake

FIELDS-THE-LAWYER works in a very large office in a very large building on the east side of the Avenue of the Stars. Across the street is another huge building, and in the middle of it—the ninth floor, to be exact—another Woozle sits in a law firm and thinks about Pooh.

His name is Daniel Petrocelli. On the big desk in his sunny office a thinnish book rests atop a thickish pile of papers. The book, Lawyers I Have Loved and Loathed, has been there for days—perhaps it’s always there, for all Pooh knows—and that is fitting because in the Thistly Thicket that L.A. lawyers call home, Petrocelli has been both.

Petrocelli, like Fields, has a clever brain. In 1997 he represented the family of waiter Ron Goldman in a wrongful-death action against O.J. Simpson. As Pooh understands it, Petrocelli became a Folk Hero by winning a unanimous jury verdict against the former football star and a judgment of $33.5 million for all plaintiffs. The case got Petrocelli on the cover of Time. It also turned him into an author of the 644-page Triumph of Justice: Closing the Book on the Simpson Saga. Since then the 48-year-old graduate of Southwestern University Law School has moved to the La-Dee-Da law firm O’Melveny and Myers. For the past 18 months he has been Disney’s lawyer on all matters Pooh.

Juries warm to Petrocelli. He is a regular sort of guy, with a voice that makes him seem like he’s from New Jersey, which he is, and a Rum-tum-tum delivery that makes Pooh wonder when he has time to breathe. Petrocelli has thick hair that stands at attention on his head much like Eeyore’s mane stands on Eeyore. The lawyer also has a habit of starting sentences with “What I don’t think you’re understanding is … “After he explains what he thinks you should be understanding, he often asserts, “Okay?”

Right now Petrocelli is explaining what he thinks the Pooh Lady’s lawsuit is about. “Unconscionable greed,” he says. “The legacy of Winnie-the-Pooh and the treasure that it is for generations of kids is something that Disney has taken the time and money to accomplish.” He asserts that because Disney owns motion picture rights to Pooh, video proceeds are the company’s alone. Besides, he points out, thanks to Disney the Pooh Lady and her daughter are already “wealthy beyond their dreams.”

Part of Petrocelli’s job is to prevent them from getting a whole lot wealthier. The other part is to tame the Heffalumps who report and write articles about the entertainment Industry and to keep them from making Disney’s stockholders anxious. During the Katzenberg trial, when Disney lawyers argued that the former executive was not due the money he was seeking because he overestimated the long-term profitability of various Disney properties, it was big news. Disney stock fell more than 20 percent during the two months of public hearings in the case.

No one wants that to happen again. Already during the last calendar year the price of Disney stock has fallen 27 percent. The company’s net income has dropped for four straight years, its sales have gone flat, its theme parks face increased competition, and the ABC Television Network is ranked last in the ratings. This is not a time when Disney wants to contemplate the loss of Pooh. Which is why the Pooh Lady’s lawyer, who filed papers last year formally seeking the right to terminate Disney’s Pooh license, is doing his Woozle-y best to make them think of nothing else.

“Absurd!” Petrocelli says of the Pooh Lady’s bid to reclaim Pooh. “Winnie-the-Pooh is safe in Disney’s hands.”

IV. In Which Walt Disney Makes the Pooh Lady a Promise

SOMETIMES WINNIE-THE-POOH likes a game of some sort when he comes downstairs, and sometimes he likes to sit quietly in front of the fire and listen to a story The sort of stories he likes are ones about himself. Because he’s that sort of Bear.

Once upon a time, back in 1930, Milne-the-Author sold the U.S. and Canadian merchandising fights for Pooh to a literary agent named Stephen Slesinger. Pooh was already an inextricable part of growing up British. Readers loved Pooh and his friends—their well-worn bodies (as drawn by E.H. Shepard), their innocence, their idiosyncrasies.

Nobody can spell in the 100 Aker Wood. Or rather, Pooh can spell, but his spelling is Wobbly, which is to say it’s good, but it wobbles and the letters get in the wrong places. So in Milne’s neatly turned stories, when Piglet forces his way through a Small Space, he is said to have squoze. A customary procedure is a Crustimoney Proseedcake, and a jar brimming with honey is a goloptious full-up pot. There are hums and songs and poems, too, many of them full of nonsense. Like when Pooh announced:

   I lay on my tum
   And I tried to hum
   But nothing particular seemed to come.
   My face was flat
   On the floor, and that
   Is all very well for an acrobat;
   But it doesn’t seem fair
   To a Friendly Bear …

You get the idea.

From the start, Milne’s whimsicality—the way each book contained exactly ten chapters, for example, each set off by a roman numeral and a heading that began “In which …”—had detractors who found it too cute. Writing in The New Yorker in 1928, Dorothy Parker announced that after reading Milne’s use of words like hummy and tiddely-pom she had “fwowed up.”

But Slesinger saw what Milne’s many fans saw: that his round-about humor, philosophical dialogue, and gentle poking at pomposity (Owl) and snippiness (Rabbit) and self-pity (Eeyore) created a world that everyone could recognize. When, during the Depression, Slesinger scraped together $1,000 to buy Poohs rights, he was betting that Americans and Canadians would someday be eager to surround themselves with Pooh. Two years later he and Milne amended their agreement, adding rights to use Pooh on TV, radio, and “any such future similar or allied devices”—a phrase that Fields says covers the Internet.

Slesinger had been born into a wealthy Manhattan family in 1901. As a child he loved comics, western lore, and popular fiction, and in the 1930s these would form the foundation of his career as a merchandising pioneer. Slesinger and entrepreneurs like him believed that there was money to be made convincing Americans to memorialize their favorite comic or bedtime story with the purchase of a product. The key was picking the right popular books, funnies, radio shows, and movies and buying their ancillary rights.

Over the years Slesinger would develop ancillary uses for Tarzan, Alley Oop, Charlie Chan, Blondie, and two comic strips he invented, King of the Royal Mounted and Red Ryder. Once he owned the rights, the possibilities were endless. Winnie-the-Pooh’s registration with the Canadian Patent and Copyright Office, for example, protected Slesinger’s right to use the bear to sell everything from “Hair Crimpers” to “Talcum Powder” to “Radio Receiving Sets and Parts thereof.” In the United States, Slesinger created a best-selling series of Pooh phonograph records as well as toys, engraved silver candy dishes, and a Parker Brothers board game. Still, in 1953, when Slesinger died suddenly, Pooh remained largely unknown on this side of the Atlantic.

That’s when Slesinger’s widow stepped in. A former vaudeville dancer, Shirley Slesinger had a one-year-old daughter to raise and no experience running a business. She took over her husband’s company and read every contract he had ever entered into. When she was done, she decided to invest heavily in Winnie-the-Pooh.

“He was my favorite of all the characters we owned,” she says. “I could see what we had to do. We went into children’s wear. I had dishes, toys, wall hangings, calendars. We had Pooh Comers in all the best stores around the country I had a Pooh suit made so you could come and meet Pooh. Anything I could grab on to, I did. I was a Pooh person.”

In the 1950s it was unusual for a woman to be president of a company That the Pooh Lady had the savvy to win over those who mistook her for a secretary, the personality to hook buyers who asked, “Winnie-the-Who?” and the gumption to launch a national merchandising campaign from scratch was all the more rare.

The Pooh Lady’s daughter, Pati, admits that she envied the bear. “I was seriously a little jealous because he took all of my mother’s time,” she says. “But then I got older and accepted the fact that we lived with my family and the plush.” By 1960 Stephen Slesinger Inc.’s Pooh merchandise was selling in Saks Fifth Avenue, Lord & Taylor, and Neiman Marcus, among other Grown-Up Stores.

All this caught the eye of Walt Disney, who knew better than most the value of a well-marketed children’s icon. During the 1930s, the lean years of the Disney Company, sales of Mickey Mouse watches and toys had helped keep the Disney enterprise afloat. By the 1950s, according to Richard Schickel’s The Disney Version: The Lift, Times, Art, and Commerce of Walt Disney, the Mouse alone had appeared on 5,000 different items, which had contributed $250 million to the Gross National Product. Donald Duck, Goofy, and other Disney characters were hard at work as well.

Now it was Pooh’s turn. In 1961 Disney acquired the worldwide motion picture rights to Pooh directly from Milne. Then Disney sent an emissary to license the rights the Pooh Lady owned. She was easy to convince. In her mind, she said in a sworn deposition, Walt was “the God of ’em all.”

Soon after the paperwork was complete, the Pooh Lady met God at a party in Manhattan. “You’ll never be sorry you signed with us,” she remembers Disney promising. “He patted me on the shoulder, and I just thought, `I don’t believe this.'” Making the Pooh deal with the Disney Company, she says, “was the highlight of my entire life up to that point. I was so thrilled because this would give Winnie-the-Pooh a chance to go to the masses.”

V. In Which Pooh Debate His New Nose

BEFORE THE POOH LADY met Disney, she came up with an idea to sell her Pooh merchandise: Tea Parties with Pooh. “Christopher Robin and Winnie-the-Pooh are coming to Filene’s Restaurant, Toosdy, Feb. 18th,” read a newspaper ad for one such event. “Make your rezvashunz at the reztaurant offiz. $1 per person.”

“It wasn’t zip, bang, boom, boom like today,” the Pooh Lady remembers. “Moms and kids would come, we’d have Pooh there, and we’d serve tea. Very English.”

The tea parties stopped, however, when Disney took charge of Pooh. The bear may have been born in Great Britain, but in the mid 1960s he would be remade into an American Symbol.

“Massacre in 100 Aker Wood … Or how Disney the Walt said Pooh to Winnie,” read the April 1966 headline in London’s Daily Mail. What followed was a blistering review of Winnie-the-Pooh and the Honey Tree, Disney’s first Pooh film. Among the Mail’s complaints: Piglet had been replaced by a gopher; Rabbit had morphed into a “maniacal Bugs Bunny figure”; most of the characters had American accents; and Christopher Robin—deemed too “sissified” by Disney—had been altered to look “rather like Pinocchio.”

E.H. Shepard, Milne’s collaborator, declared the film “a complete travesty.” After all, he’d based his drawings on the real Christopher Robin, Milne’s son, and his collection of toys. Shepard’s Pooh was usually naked. Disney’s Pooh wore a red T-shirt and looked like he’d had a nose job.

What the Daily Mail and others deplored most was that Disney’s merchandising blitz threatened to relegate the bona fide Pooh to the dustbin of history “One consolation for Pooh-mourners is that the effort of re-creating Winnie has cost Mr. Walt Disney one million dollars. Not so gratifying are the methods being used to recoup it,” wrote the Mail, which lamented that the commercial exploitation of the new Disney Pooh amounted to “wheeler-dealering with a part of the British heritage.”

According to Ann Thwaite’s The Brilliant Career of Winnie-the-Pooh: The Definitive History of the Best Bear in All the World, the release of that first film was accompanied by 169 Pooh items from 49 licensed manufacturers. Just as Stephen Slesinger had hoped, Americans were taking Pooh into their homes.

There would be five more films, more than 30 home videos, and a series on the Disney Channel. There would be a “Many Adventures of Winnie-the-Pooh” ride at Disney World; at Japan’s Disney theme park, Winnie-the-Pooh’s “Hunny Pot” would become the most popular attraction. By 1996, of the $622 million in licensed infant products sold in the United States, nearly half would feature Pooh.

The Pooh Lady’s wish—for Pooh to become part of mass culture—had come true. Few Americans can go 24 hours without encountering address books, adhesive bandages, backpacks, bassinets, bath towels, bed linens, bibs, breakfast cereals, bubble baths, chocolate figurines, clocks, diaper bags, dreidels, egg-decorating kits, floral arrangements, garden tools, gift bags, greeting cards, hair accessories, Halloween costumes, hand puppets, juice boxes, lunch boxes, music boxes, napkins, neckties, nightgowns, party invitations photo albums, picture frames, puzzles, quilts, rubber stamps, shampoos, snow globes, stickers, swimsuits, switch plates, telephones, toasters, tumblers, Tupperware, underwear, wallets, or wristwatches branded with Pooh’s face.

While Mickey Mouse remained Disney’s corporate symbol, the kindhearted Pooh was its ambassador—its entree into the homes and hearts of consumers around the world. The Silly Old Bear had become Serious Business.

But for all the dollars being gained, a Precious Something was being lost. Pooh not only appeared on adorable, brightly colored wallpaper, he was becoming wallpaper. Like the dense fog that engulfed the bear and his friends in chapter VII of The House at Pooh Corner, Pooh was Ubiquitous: Easy to See but increasingly Hard to Know.

VI. In Which the Pooh Lady Smells a Rat

AT FIRST THE POOH LADY loved her new colleagues at the Walt Disney Company almost as much as Kanga loves Roo. Especially during the first five years of the license agreement, when Disney paid her to keep managing the merchandise she’d created, she was in close contact with Disney’s consumer products division. Walt Disney died in 1966, the same year that Disney released its first Pooh movie and launched its own Pooh campaign. Still, the Pooh Lady continued to send gifts and offer ideas.

All that changed in the early 1980s when the Pooh Lady began to find Strange Holes in her royalty statements. Disney had allegedly stopped reporting royalties from the sale of phonograph records, had failed to report income on third-party licensees such as Hallmark Greeting Cards, and was not including revenue it received from Pooh-related sales at its theme parks.

The Pooh Lady brought these concerns to the attention of Disney executives, as well as her fear that they had failed to separate Pooh income from that of other Disney characters. According to court records, Vincent Jefferds, then president of Disney’s consumer products division, promised the Pooh Lady and her daughter that Disney would treat them right: “We are not going to cheat a widow and an orphan.”

The Disney Company; meanwhile, had some concerns of its own. It turned out that Milne had made a Preposterous Mess of the Pooh rights. The Pooh Lady owned the U.S. and Canadian rights, and the Milne Trust, which represented Milne’s heirs, retained the rest of the world in addition to the publishing rights. But the breakdown was Fuzzy in Places. In 1982 Disney set out to negotiate a new agreement that would give both the Milne Trust and the Pooh Lady varying royalties on everything sold worldwide.

Negotiations turned Fierce and Hostile, however, when the Pooh Lady asked to add language that spelled out royalties to be paid on videocassettes. Video was a relatively new commodity then—it hadn’t existed when the 1961 agreement was signed—and the Pooh Lady wanted it specifically delineated in her contract. Disney executives resisted.

It bears remembering that the Pooh Lady sees Pooh as a member of her family as a link to her late first husband (she remarried in 1964), as a lasting legacy partly built of her own hard work. Her investment in Pooh can make her difficult (just ask the four sets of lawyers she’s hired and fired so far). But it has also made her unusually persistent. Few people have the financial and emotional wherewithal to battle a large corporation like Disney for a dozen years. It is Pooh, of course, who has funded her fight, which has cost her millions. She would say he’s buoyed her spirits, too.

During negotiations on the 1982 agreement, Disney tried to bully her, threatening to take all Pooh merchandise out of its theme parks until she signed. Frustrated, the Pooh Lady’s daughter appealed to Jefferds, the Disney executive, meeting him for a drink in March 1983 at the Beverly Hills Hotel’s Polo Lounge. Her typewritten account of that meeting—a note to her mother known as the “Dear Mommie” letter—is a key document in the case. Disney lawyers have repeatedly suggested that the letter looks about as real as Pooh looked when he dunked himself in mud and said he was a Rain Cloud. But Judge Hiroshige has already decreed that Disney will be prohibited from disputing some aspects of the “Dear Mommie” letter—among them Jefferds’s assurance that the Pooh Lady’s right to video royalties was implicitly protected.

In the letter Jefferds is described as downplaying the value of video even as he promised that the Pooh Lady would get her share. “He said these details were all gone over already … [and that] he was not going to let little girls like me hold things up any more,” wrote the Pooh Lady’s daughter (who was a little girl of 31 at the time). “Then he said videos and all these new things are covered and to shut up about it.” Videos were like chopsticks, according to Jefferds, who was about to travel to China. “I’ll have millions of kids eating with Pooh chopsticks,” he told the Pooh Lady’s daughter, indicating that with those—as with videos—she and her mother would receive a royalty even though “they are not listed in your contract. It’s just not necessary to start listing and adding every new product that comes out.”

The Pooh Lady signed the new agreement in 1983. After receiving her next royalty statement, however, she wrote a pointed letter to Jefferds. Where were her video royalties being listed, she wanted to know? Were they under the music division? “I presume you are correct,” Jefferds wrote back, adding that if not, the accounting department would be in touch. They never were. For the moment, the Pooh Lady thought everything was Fiddledy-dee.

In 1987, though, an attorney for the Milne Trust discovered that Disney was not paying any royalties on videos after all. Then the Pooh Lady’s daughter bought a Pooh Pepsodent toothbrush that had never appeared on any of Disney’s royalty statements. She and her mom spent $14,000 on Pooh merchandise in Japan, their court filings allege, only to find they weren’t getting royalties on any of it.

The Pooh Lady filed suit. But even as she took Disney on, she continued to be Wild About Pooh. To this day she buys thousands of dollars’ worth of Pooh stuff from Disney each year. “Honestly, I think I spend more money at the Disney stores than anybody else,” the Pooh Lady says. “Their merchandising is so beautiful that I just have to have it. I walk in and it’s like, `Buy me! Buy me!'”

VII. In Which a Search Is Organized, and the Accountants Look for the Forest Amidts the Trees

YOU MIGHT THINK that measuring two pots of money would be as simple as reaching in a paw to see how much sticks to your fur. If you thought that, you would be like Tigger when he said climbing trees is what Tiggers Do Best. You would be, in other words, Sadly Mistaken.

In 1996 the court hired Michael Miskei to analyze the pot of Pooh revenue on which Disney agreed royalties should be paid. Miskei is a Forensic Accountant, which is a title that makes Pooh shudder and think of Dead Bodies but which really only means that Miskei dissects numbers. In this case, he sought to study three six-month periods in 1985, 1988, and 1994 to determine whether Disney was paying the Pooh Lady what she was owed. It’s fair to say he had a Very Unpleasant Job.

For the 1994 period alone Miskei received from Disney 15 boxes of documents—tens of thousands of pieces of paper. There were royalty statements and contracts for sublicensees. Some were in English. Some were not. “In some cases,” Miskei said in a 1997 hearing, “they had addendums on addendums on addendums.”

Miskei and six investigators spent nine months (and charged fees totaling nearly $1 million) to determine how much Disney had over- or underpaid the Pooh Lady They faced a Panoply of Problems. First, many records were missing or destroyed—so many in fact that the 1985 time period was deemed unworkable for an audit. Second, Miskei and his team faced the Multi-Character Confusion, which affected items that featured Pooh along with other Disney characters. Third, there was the rather Bothering matter of Foreign Currency Translation. At one point, auditors found that for several years Disney had used the wrong conversion rate for Winnie-the-Pooh revenue from Japan. The error cost the Pooh Lady a Chunk of Change.

In the end, Miskei’s team found that Disney had indeed underpaid the Pooh Lady but just barely For the six months ending March 31, 1988, the Pooh Lady was owed $16,019. For the six months ending September 30, 1994, she had been shorted $44,489.

In recent weeks Petrocelli has trumpeted these figures, which on their face seem to poke a Big Fat Hole in the Pooh Lady’s case. For all the Pooh Lady’s bluster, he says, she’s turned up “virtually nothing.”

Fields says Petrocelli is wrong. The pot of money Miskei examined, Fields says, represents perhaps one-hundredth of what is at stake in the case. Think of the Pooh case as a pond. Fields yearns to hook the huge Video and DVD Fish. The dinky Royalty Error Fish don’t interest him quite so much. Those are the fish that Miskei studied.

When the accountants completed their review of Disney’s books, of course, Fields hadn’t yet jumped into the Pooh pond. In 1999 he was still busy making his reputation as the town’s reigning Disney slayer by winning Katzenberg his settlement. Within a year of that victory the Pooh Lady dumped her fourth set of lawyers and hired Fields. Almost immediately; he challenged Miskei’s methodology—particularly his decision not to include certain Disney underpayments when computing an overall rate of error. Fields took issue with the way the Pooh Lady’s previous representatives had been excluded from meetings in which Disney showed Miskei its files. Fields was, in short, a World-Class Woozle—so much so that two months ago Judge Hiroshige issued a tentative ruling that fired Miskei and tossed out key parts of the accountant’s report that he found to be full of Inaccurate Estimates and One-Sided Judgments.

But the Grandest Idea that Fields and his right-hand Woozle, Bonnie Eskenazi, thought up was adding a new Cause of Action to the Pooh Lady’s complaint. When they filed papers seeking Declaratory Relief Re Right to Terminate, Fields and Eskenazi changed the Pooh Lady’s case from a run-of-the-mill royalty squabble into a make-or-break challenge to Disney’s financial stability.

Many people suspect that Fields’s assertion that Disney’s Pooh license can be terminated is more of a tactical maneuver than an expression of the Pooh Lady’s wishes. For months Petrocelli—who replaced Disney’s first law firm, Skadden Arps, in 2000—scoffed at Fields’s claim that termination was a legal possibility. But in a recent filing with the Securities Exchange Commission Disney acknowledged that termination of the Pooh license is possible, and that it could cost the company “If each of the plaintiff’s claims were to be confirmed in a final judgment,” the SEC filing states, “damages could total as much as several hundred million dollars and adversely impact the value to the Company of any future exploitation of licensed rights.”

The Pooh Lady pays Fields by the hour, at a Not Very Trifling Rate of $850 ($100 more than Petrocelli reportedly makes). Is he worth it? Apparently the Pooh Lady’s daughter thinks so. She has written a poem, “The View of Pooh,” that has 22 stanzas. Here are 4:

   Now, oh giant corporation.
   This Pooh wants an explanation—
   Tell me, please, how much you owe,
   And where did all my Hunny go? 

   Through all the tangled, tangled vines
   Of your worldwide accounting lines,
   In all the documents you shredded,
   For 40 years that we were wedded? 

   “Oh, Bother! Now what can we do?
   Think. Think and Think,” thought Pooh.
   “Hire a lawyer,” cried Baby Roo;
   “A lawyer who knows just how to sue.” 

   “A lawyer?” Said Eeyore, feeling blue.
   “I suppose-that is-what we-must do.”
   “A lawyer,” said Tigger, “who never Y-Y-Yields!
   Let’s all bounce over to see Bert Fields.”

VIII. In Which a Heffalump Is Trapped and Another Lawsuit Filed

POOH USED TO wonder what a Heffalump was like. Was it fierce? Did it come when you whistled? Then he met one.

Nikki Finke is a Hard-Charging Journalist who has written about Hollywood for more than a decade. Recently; representatives for Disney have cast her as a Flibbertigibbet. Pooh is the reason why

Late last year Finke was hired to cover entertainment news for the business section of The New York Post. On January 28 she filed a story that editors split in two and topped with the headlines “Deep Pooh-Pooh” and “Pooh Scandal Is `$hred’ Hot.” Much of what she said about Document Destruction and License Termination had already appeared in West Coast publications. But Finke’s articles were printed in an East Coast newspaper. The articles, which ran 21 days before the annual Disney shareholder meeting in Hartford, Connecticut, made Disney executives Fussy and Irritable.

According to Disney; Robert S. Iger, its president and chief operating officer, sent a letter to Col Allan, editor of the Post, that accused Finke of Absolute Distortions and Serious Misrepresentations. Iger alleged that her stories were “clearly designed to injure the Walt Disney Company…. I am sure you can appreciate why we are so disappointed with the Post’s inaccurate, misleading, and unbalanced account.”

In February; as the shareholder meeting got under way; The New York Post fired Finke. So she went to see a Woozle named Pierce O’Donnell, whom Forbes magazine once called Hollywood’s new Perry Mason. In April, O’Donnell filed a $10 million lawsuit alleging that Finke was wrongfully dismissed after Disney threatened Finke’s bosses. Among the defendants: the Walt Disney Company and News Corporation Ltd., which owns The New York Post and 20th Century Fox.

The suit is full of phrases that fill up your mouth when you try to say them—phrases like Collusive Actions of Mega-Media Corporations and Implied Duty of Good Faith and Fair Dealing. The suit alleges that Disney and News Corp. are “in cahoots” in that The New York Post “pusillanimously joined Disney in its calculated campaign to destroy the career of an able, high-profile reporter.”

Pusillanimous is one of those words, like shibboleth, that sounds as if Pooh made it up. But he didn’t. Pusillanimous is an actual Very Long Word that means “timid and cowardly” O’Donnell-the-Lawyer is neither of these things. Rather, he is the kind of showman who can’t resist using pusillanimous in a lawsuit about Pooh. The 55-year-old litigator, come to think of it, looks a little like Pooh, with a roundish tummy and an oversize head.

The Thistly Thicket in which Woozles who practice entertainment law reside is even smaller and more insular than Pooh Corner. O’Donnell and the Pooh Lady’s lawyer, for example, have faced off more often than Eeyore wallows or Piglet squeaks. O’Donnell was Art Buchwald’s lawyer when the writer sued Paramount; the studio hired Fields on appeal. In the credit dispute over the 1997 film about slavery, Amistad, Fields represented Steven Spielberg; O’Donnell worked for author Barbara Chase-Riboud. Long before the Pooh Lady hired Fields, she approached O’Donnell.

Petrocelli, meanwhile, has sought to strike O’Donnell and Finke’s complaint under something called the Anti-SLAPP Statute, which you might think forbids hitting but which seeks to weed out meritless lawsuits that discourage free speech. In June, however, a judge issued a tentative ruling that not only denied Disney’s Anti-SLAPP motion but also questioned whether the version of Iger’s letter that Disney produced, which is undated and bears no typist’s initials, was ever sent. So Finke and O’Donnell, the Heffalump and her Woozle, soldier on.

IX. In Which the Lawyers Flex Their Muscles

POOHSTICKS is a game that Pooh invented. Here’s how it works: Pooh and his friends each pick up a stick and throw it off a bridge into the river. Then everybody hurries to the other side of the bridge, leans over the edge, and waits to see whose stick floats by first.

If the lawyers in these Bear-related cases ever got together to play Poohsticks, it is fair to say that Bert Fields’s stick would float farther and faster than anyone else’s. Or, looked at another way, if Fields were a stick, he’d be the stick to beat.

During the Katzenberg case, many were surprised that Lou Meisinger, Disney’s general counsel, let the matter go to trial. Trials are Messy, Unpredictable Things. Moreover, even before Eisner’s Churlish Trip to the witness stand, Disney was commonly seen to have wedged itself into a Spot of Great Tightness. The company was arguing, in part, that the properties Katzenberg had developed—among them The Little Mermaid, Aladdin, and The Lion King—weren’t as profitable as he claimed. But that argument was at odds with statements Eisner had made to shareholders. It made Disney vulnerable in other arenas where it wanted to appear strong—specifically, Wall Street.

So why did the case go to trial? Many still speculate that part of the reason was professional rivalry Because Fields has never lost a trial, the speculation goes, the chance to beat him was hard for Meisinger to resist.

Some wonder whether the same dynamic is at work in the Pooh case. This time Disney again finds itself Tightly Wedged. The company’s top executives have boasted for years about the strength of the Pooh franchise. In i999 the Heffalumps at the Orange County Register reported Eisner saying that the Pooh product line had grown from a $390-million-a-year business to a $3.3-billion-a-year business in just 36 months. In 2000 Forbes cited a Merrill Lynch media analyst’s estimation that Pooh products generate some $6 billion in retail sales annually-double what they had done in 1995.

Today, though, Disney is downplaying Pooh’s value, cautioning that those numbers refer to the so-called street value of Winnie the-Pooh around the globe. Much of that $6 billion, Petrocelli says, is revenue to Toys ‘R’ Us, Sears, Wal-Mart, and others. “In terms of Disney [annual] revenue, about a billion dollars is derived from exploiting Winnie-the-Pooh. The plaintiff gets about $12 million of that a year.”

When Petrocelli argues that Pooh makes less money than some people think, however, Pooh just scratches his head. For it was not so long ago, in Katzenberg v. Disney, that another Disney Woozle argued the opposite. Many believe that, depending on what best serves its bottom line, Disney will call Pooh a Heavyweight one day; Stuffed with Fluff the next. Petrocelli says that’s Typical Misinformation. Meanwhile, he is relishing the prospect of taking Fields on. Why else would he keep a picture of him in his office?

A recent article in W magazine featured a photo of Fields at the beach. Trim and fit in a Speedo, he is mugging for the camera, striking a muscle man pose. Petrocelli has a blowup of that photo in his office—a gag gift from Disney’s team of Pooh lawyers. Fields is pasted next to a shot of another scantily clad man, this one with a perfect physique and Petrocelli’s face glued on top. “His clients call him a genius in the courtroom. His girlfriends call him a genius in the bedroom” reads the caption, which is lifted from a promotional blurb about a legal thriller Fields once wrote. Petrocelli’s colleagues signed the poster, “Dan, we’re glad we have you instead of Bert.”

“Make no mistake,” Petrocelli says. “I don’t sit around measuring myself against Bert Fields. I have my own track record.” If Petrocelli wants to prove he can outperform Fields, however, he’s going to have to throw his stick in the water. Before he does so, he might do well to read chapter VI of The House at Pooh Corner, in which several rounds of Poohsticks teach Pooh this lesson: The biggest stick tends to win.

X. In Which a Settlement is Not Yet Reached, and We Leave Them There

HALFWAY BETWEEN the offices of Fields-the-Lawyer and Petrocelli-the-Lawyer there should be a Thoughtful Spot where they can go to meet. So far, the Woozles haven’t found it.

That’s not to say they haven’t been busy Petrocelli has filed numerous appeals relating to Judge Hiroshige’s sanctions orders and has asked that the trial be stayed pending their resolution. Fields doesn’t want any more delays, so he has offered to waive the $90,000 fine Disney has been ordered to pay for destroying documents.

Last year Disney settled with the Milne Trust by buying it out once and for all—reportedly for a lump sum of $350 million. So the Pooh Lady goes it alone. Settlement talks have been sporadic. In 1992 Disney offered $50,000 to settle the case, a sum that Disney’s in-house lawyer at the time described in a letter as “extraordinarily generous.” Eight years later Disney raised its offer to $2 million. Again, the Pooh Lady said no.

Petrocelli talks of being willing to Be Reasonable, despite what he says are Fields’s attempts to Extract Windfalls. Under no circumstances, he says, will Disney Be Hijacked. Fields says only that the two sides are Very Far Apart. The Pooh Lady he says, is not seeking a onetime buyout. She wants Pooh in her and her daughter’s lives forever. But she wants to escape the Swamp knowing that neither she nor Pooh will ever have to return.

For his part, Pooh wouldn’t mind returning to the 100 Aker Wood for a good, long rest. Circumnavigating the Globe, he has learned, is harder than it was in Pooh Corner, where you could Organize an Exposition to the North Pole and still be back for tea. All Pooh knows is that 12 years of bickering is a lot, which brings to mind the time Piglet had more snow behind his ears than he had ever had. It wasn’t very long before Piglet got tired of it.

We all, every one of us, have our own dark forests—places where we stumble over the Sharp Stones of Self-Conceit and Jaggedy Rox of Negativity and plunge into moods rather Boggy and Sad. What Pooh has spent more than 70 years trying to prove is that there is Wisdom in Simplicity, Pleasure in Positivity, and More to Knowing than Being Correct. What the Pooh Lady’s lawsuit and the resulting hubbub shows is that Pooh’s work is Far from Done. “Rabbit’s clever,” Piglet once said. “Rabbit has Brain.” To which Pooh replied, in a Sunny, Careless Way that assured he would have the Best and Last Word, “I suppose that that’s why he never understands anything.”

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