LOS ANGELES — A judge threw out a lawsuit against the Walt Disney Co. over Winnie the Pooh merchandise royalties, ruling Monday that the owner of those rights unlawfully obtained confidential documents from Disney offices and trash.
Superior Court Judge Charles W. McCoy Jr. dismissed the suit with prejudice, meaning Pooh rights owner Stephen Slesinger Inc. cannot sue again on the claim.
"SSI's misconduct is so egregious that no remedy short of terminating sanctions can effectively remove the threat and adequately protect both the institution of justice and (Disney) . . . from further SSI abuse," McCoy wrote in the 28-page ruling.
The decision, if it survives appeal, brings to a close a 13-year legal bid by SSI, which sought to recover millions of dollars it says Disney owes it for Pooh-related merchandise and royalties on the sale of videotapes, DVDs and computer software. Disney has said those items were not covered in its 1983 licensing agreement with SSI.
"After 13 years in the courts, the Winnie the Pooh case is finally over," said Disney attorney Daniel Petrocelli. "Disney's position has been vindicated in its entirety. We're obviously extremely pleased with the outcome, and we think it was the only appropriate one."
SSI said it would appeal.
"What is in the garbage documents is that Disney committed fraud, and the judge has thrown out the baby with the bath water," the company said in a statement. "This has not removed Disney's ongoing obligation to pay royalties to Slesinger family or remedy its unauthorized uses of Pooh."
McCoy's ruling came in response to a motion to dismiss by Disney, which alleged SSI used a private investigator to steal more than 6,000 pages of documents from trash bins and company offices over a period of years and then refused to provide them to Disney's lawyers.
The judge concluded SSI could not properly explain how it acquired many Disney documents and said it likely made sure to conceal any evidence of how its investigator came upon them.
"This absence of records is not, in the court's view, accidental," McCoy wrote. "SSI had no right to break laws to obtain evidence. . . . And, SSI had no right to covertly or overtly use unlawfully obtained evidence for its own tactical purposes."
SSI attorneys had argued that there was nothing improper about retrieving documents from a trash bin because Disney had thrown them away. They added that the documents ultimately didn't reveal anything significant.
McCoy said he saw no way to handle the situation other than to throw the case out because there would be no way to keep SSI's attorneys and executives from using the privileged Disney information if the case went ahead.
"SSI's willingness to tamper with, and even corrupt, the litigation process constitutes a substantial threat to the integrity of the judicial process," McCoy wrote.
Shares of Disney rose 10 cents to close at $25.20 on the New York Stock Exchange.