Queen of Nice became über-bitch, court told

She was once one of America's most popular television stars, nicknamed the Queen of Nice. But this week, Rosie O'Donnell is facing a publicity catastrophe in a legal battle with the owners of her defunct namesake magazine, Rosie, which collapsed last year when she walked away from it.

In the trial in Manhattan a former employee who had survived cancerrecalled being told by Ms O'Donnell that she was a liar ­ and that the punishment for lying was cancer.

Gruner + Jahr (G+J), owned by the German publisherBertelsmann, is suing Ms O'Donnell for $100m (£60m),alleging that she broke her contract by abandoning the magazine. Ms O'Donnell iscounter- claiming $125m for breach of contract by the publisher.

An attempt on Wednesday by both sides to agree to an out-of-court monetary settlement ended in failure, sources said, when Ms O'Donnell refused to sign an agreement not to disparage G+J in public. She was expected to do just that when invited to the stand either later yesterday or this morning.

So far, the witnesses for G+J have held the stand. Ms O'Donnell has been depicted as a foul-tongued harridan who refused to work with a new editor installed by G+J to try to revive the magazine.

"Rosie is a celebrity who became addicted to getting her own way," said G+J's lawyer, Marty Hyman. "She went from being warm and fun-loving on TV to an 'über-bitch' ".

Testimony was suspended after Cindy Spengler, a former marketing executive at the magazine, broke down after recounting how she was accused by Ms O'Donnell of staying silent in one conversation with the publishers instead of speaking up for the star. The silence was tantamount to lying, Ms O'Donnell allegedly complained.

"You know what happens to people who lie," Ms Spengler quoted Ms O'Donnell as telling her. "They get sick and they get cancer. If they keep lying, they get it again." Ms O'Donnell was aware that Ms Spengler was a survivor of breast cancer. Later, Ms O'Donnell told reporters she regretted the remark.

Ms O'Donnell is apparently looking forward to telling her side. "One or two more days of watching them beat me up, and then we get to present our case," she said. "My 8-year-old keeps saying, 'Why don't you tell the judge what they did?' Then he says, 'Are you going to go to jail?' 'No, Mommy is not going to jail'."

The final showdown with Susan Toepfer, the editor installed by G+J, came when she proposed putting a photograph on the front cover of the magazine showing Ms O'Donnell with two female stars from the hit cable television programme The Sopranos.

On the stand, Ms Toepfer recounted receiving a call from Ms O'Donnell when she had seen the picture. "She said, 'You're about to hear a Rosie you've never heard before'," Ms Toepfer said. "She was screaming obscenities at me. She said, 'As a lesbian, I'm uncomfortable being on a magazine cover holding another woman or touching another woman'."

Ms Toepfer told the court that working with Ms O'Donnell became impossible. She recalled being told by the star: "If I'm not the boss of this, I will bring it down. I will close the magazine down."