Defense lawyers in the Walt Disney trial on Friday tried to undermine the credibility of a witness who testified that company directors neglected their oversight duties when they hired and later fired the president, Michael S. Ovitz.
The witness, Prof. John J. Donohue III of Yale, concluded on Thursday that Disney could have saved $140 million in severance if it had fired Mr. Ovitz for cause in December 1996 rather than considering the departure a no-fault termination.
In cross-examination on Friday, Stephen Alexander, a lawyer for the former directors Roy E. Disney and Stanley P. Gold, tried to get Mr. Donohue, whose expertise is termination law, to admit that he had failed to balance the benefits of firing for cause against the possibility of a lawsuit for breach of contract.
Mr. Donohue’s testimony that the contractual grounds for firing Mr. Ovitz were malfeasance and gross negligence prompted some sparring with Mr. Alexander over which definition of the terms applied in the case.
“Any acts of indifference to Mr. Ovitz’s duty of care would qualify as a basis for termination with cause,” Mr. Donohue said, asserting that his findings were not based on any single act but on a pattern of behavior.
He cited a memorandum in which the chief executive, Michael D. Eisner, told Mr. Ovitz, “You’re out of control,” and he contrasted the $2 million said to have been spent on refurbishing Mr. Ovitz’s office with the $4 million cost of the new courthouse where the trial is being held.
“There was an indifference to the duty of shareholders of the Disney corporation,” Mr. Donohue said.
The sparring continued with Mr. Ovitz’s lawyer, Mark Epstein, who pointed out that Mr. Donohue was “not an expert on the entertainment industry” where lavish gifts and executive compensation are considered the norm.
