By Marc Gunther

(FORTUNE Magazine) – Another trial for Disney

Georgetown, Del., is a long way from Hollywood. Heck, it's an hour and a half from Wilmington. For the next few weeks, though, the tiny town will be the setting for a shareholder lawsuit against the Disney board that will be closely watched, not only in the gossipy entertainment industry but in boardrooms across America. Among those expected to testify: Disney's CEO Michael Eisner, board chairman George Mitchell, ex-executive Michael Ovitz, and former directors Roy Disney and Stanley Gold. This trial won't be pretty. The plaintiffs lawyers at Milberg Weiss say that Eisner, Ovitz, and Disney's directors all failed to do their jobs when Ovitz was hired in 1995 and given a rich contract, then sent packing a year later with a $140 million severance. The plaintiffs want Eisner, Ovitz, and the board to repay the company. If Eisner can't defend himself well, pressure will intensify on Disney's current board to ease him out before September 2006, his announced retirement date. Delaware judges, who make corporate law for most of the FORTUNE 500, have traditionally given boards of directors very wide latitude. That's changing, court watchers say. If Judge William B. Chandler III finds the Disney board neglected its duties, directors everywhere will feel the pressure. Meanwhile, if you're hoping to drop in on the trial, reserve now: Georgetown has just two motels and one B&B. -- Marc Gunther