Ann McKenna Fromm

WRITER:  Books, Essays, Ghostwriting

The Scales of Justice Tilt

February 20, 2016

The Scales of Justice Tilt

In 1996, Bill Payne’s small firm filed a lawsuit.  They took on the colossal Walt Disney Company on behalf of approximately 8,000 Disney retirees and future retirees. Disney’s workers, among them secretaries, engineers who designed Disney rides, cleaning crews, ticket takers and others, faced $200 million worth of reductions in their retirement health benefits.

One such worker was Shirley Bench, the lead plaintiff, who for decades had worked in an administrative position at Disney’s Burbank studio headquarters, where classic animated motion pictures such as Lion King had been created.   Another worker, Al Francis, a tall, grey-haired trumpeter, had marched the fake streets of Disneyland for decades. Pounding the concrete had destroyed Al’s legs and now caused him constant back pain.

“I want the choice of my doctor, my specialist,” he told the Los Angeles Times. “The only reason I stuck there was for the fringe benefits. And when the time comes, there’s nothing there.”  The retirees ranged in age from about 60 to 90 years of age.

Disney argued that their retiree health benefits could be terminated or cut “at will,” and that Disney had provided benefits essentially as a gift, out of the goodness of its heart. The workers, on the other hand, believed they had worked in exchange for both wages and retirement benefits. They believed Disney had binding contractual obligations to provide continuing retirement benefits.  What good was a retirement benefit if it didn’t last through retirement?

While the case proceeded, a wealthy Los Angeles businessman, Michael Eisner, served as Disney’s CEO.  During Eisner’s tenure at Disney, he amassed vastly more wealth than he already had.  For example, in 1992, he exercised stock option compensation from Disney worth $202 million.  This compensation was above and beyond his regular annual salary.  His surplus income in that year alone far surpassed the value of all of the retiree health benefits Bill sought to recover.

In 1997, Mr. Eisner again exercised his stock options. The stock options earned him $570 million above and beyond his Disney salary that year. Why did one wealthy man need an extra $570 million dollars?  Worse, for less than one fifth of that surplus annual income, Disney could have written a check to cover the lifetime health care benefits for all 8000 aging Disney workers.

It took five years for Bill and his co-counselors to prosecute the case. In 2001, they settled with Disney for about $101 million dollars worth of lifetime health care benefits for the 8,000 workers, almost exactly half one year of Mr. Eisner’s excess stock option income.   Nobody begrudges Mr. Eisner his money.  Yet its simple fact stands as a glaring symbol of income inequality, in the raw.

And how much money did Bill Payne earn?

Lawyers who take on these cases often do so at considerable financial risk. They don’t always win. Compensation for a win, when it does come, can take years. In 2001, for example, the year he settled the Disney case, Bill Payne had no income at all. None. He was not paid for the Disney case until 2002.

For the Disney case, about fifteen lawyers shared $4 million in attorneys’ fees, or approximately 4% of the total settlement, for their five years of work.



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