Stephen Slesinger, Inc. v. Walt Disney Co.

In this case of first impression in California, we hold that when a plaintiff’s deliberate and egregious misconduct makes any sanction other than dismissal inadequate to ensure a fair trial, the trial court has inherent power to impose a terminating sanction.

In 1991, plaintiff Stephen Slesinger, Inc. (SSI), sued defendant the Walt Disney Company (Disney), alleging that Disney failed to pay certain royalties under its licensing agreement with SSI. That agreement granted Disney rights to exploit the Winnie the Pooh series of children’s stories—rights that SSI’s founder had obtained in 1930 from Pooh’s creator, A.A. Milne. In 1992 or 1993, to assist in prosecuting its lawsuit, SSI hired an investigator to surreptitiously obtain Disney documents. Other than a purported admonition to obey the law, SSI provided no direction or supervision for the investigator’s activities. Working at least until 1995, the investigator took thousands of pages belonging to Disney, including documents marked privileged and confidential. He obtained the documents by breaking into an uncertain number of Disney office buildings and secure trash receptacles, and by trespassing onto the secure…