Beef Products Faces High Hurdles in ABC News Defamation Suit

By Josh Long, Legal and Regulatory Editor

SOUTH DAKOTA Beef Products, Inc. faces extremely high hurdles in proving its $1.2 billion lawsuit against ABC News, some legal experts say.

In a lawsuit filed last month in a South Dakota circuit court, the beef company claims a number of defamatory broadcasts and online reports shattered its sales, wreaked havoc on its business relationships and forced it to shutter processing facilities and lay off hundreds of workers.

ABC must defend its journalism after a number of its broadcasts and online reports featured a substance that is placed into ground beef: "lean finely textured beef" (LFTB). BPI is the largest producer of LFTB, which has been infamously dubbed "pink slime" by the media and others including a former official with the U.S. Department of Agriculture (USDA) who has been named in the lawsuit.

In the 257-page complaint, BPI has brought claims of defamation, so-called product disparagement and other causes of action against American Broadcasting Companies, ABC News, journalists including Diane Sawyer, former USDA officials and an ex-employee of the meat company. The defendants have been accused of publishing nearly 200 false and disparaging statements, resulting in a public relations nightmare for a company that began the year with annual revenues of $650 million.

Founded by Eldon and Regina Roth in 1981, BPI declares LFTB isn't linked to a single case of a reported foodborne illness in more than 20 years.

It could be a long and challenging case for the Dakota Dunes, S.D.-based company, which received government approval nearly 20 years ago to use LFTB in ground beef.

Beef Company's Burden of Proof is High

Proving defamation, media lawyers say, is extremely difficult given the broad protections offered by the First Amendment and the higher standard of proof that applies in such cases: "clear and convincing evidence". This standard is more akin to the burden of proof ("beyond a reasonable doubt") in criminal cases than the relatively lax "preponderance of the evidence" standard that applies in the typical civil lawsuit.  

Laura Handman, a Davis Wright Tremaine attorney whose clients include CNN and Hearst Corp, said BPI would have to "prove that ABC published a false and defamatory statement of fact and that they knew it was false or had serious doubts at the time they published or broadcast in this case."

BPI first must establish a statement of fact as distinguishable from an opinion, which has been recognized by courts as protected speech. The phrase "pink slime", Handman said, is probably going to be held to constitute an opinion. BPI also would have to show harm to its reputation and prove that a statement was "substantially false", she said.

Finally, the company must establish knowledge the statement was false or the media had serious doubts as to its truth. It is a "very subjective standard," said Handman, co-chair of her firm's appellate practice where she concentrates on media and intellectual property law, "what's in the head of the reporter, what the journalists themselves [believe] at the time."

The media's broad protections under the First Amendment were acknowledged in the landmark U.S. Supreme Court case of New York Times Co. v. Sullivan. In that 1964 decision, the late Justice William J. Brennan recognized "a profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials."

BPI Claims ABC Ignored Facts

But such protections dating back to our founding fathers have bounds, and BPI claims one of the world's most powerful media organizations crossed the line in a month-long smear campaign. BPI declared ABC journalists brought forth a mountain of caustic attacks that were intended to convince consumers its product was "pink slime" than it not safe or nutritious rather than actual beef. The lawsuit also slammed ABC for its coverage of BPI's alleged influence over USDA officials.

BPI produces lean beef from beef trimmings under a process that involves a number of steps, including the introduction of ammonia gas, but the entire process lasts less than 30 minutes from start to finish, according to the company.    

"Through a series of factual misstatements, repeated continuously during the campaign, Defendants knowingly misled the public into believing that LFTB was not beef at all, but rather was an unhealthy 'pink slime' 'hidden' in ground beef as part of an 'economic fraud' masterminded by BPI," the lawsuit declares.

ABC had access to the facts, BPI alleges, but deliberately and maliciously chose to ignore them. The lawsuit claims the defendants were provided or had access to more than 60 letters, articles, press releases, reports and studies, establishing the falsity of their statements.

BPI is Shell of Former Self

What seems irrefutable in the case is that BPI has suffered severe hardship. In the wake of the media coverage, which included 11 broadcasts, 14 online reports and various social media posts, BPI closed three processing facilities, laid off 700 employees and has been losing $20 million in revenues each month, according to the lawsuit.

The company also asserted its relationships with grocery store chains and ground beef processors (with whom it had done business for two decades) have been shattered while sales of LFTB have plunged to less than two million pounds per week. That is less than half of the nearly five million pounds sold per week prior to the media coverage, BPI said.

Settlement is Unlikely 

BPI is seeking actual and consequential damages exceeding $400 million, statutory and treble damages under South Dakota's Agricultural Food Products Disparagement Act and punitive damages.

An ABC executive was quoted last month as saying the lawsuit lacks merit and that the company would contest it. J. Eric Connolly, an attorney representing the plaintiffs with the global law firm of Winston & Strawn LLP, on Thursday said ABC hasn't filed an answer yet in the case while three of the defendants have asked the court for additional time to respond to the complaint: Gerald Zirstein and Carl Custer, former USDA employees; and Kit Foshee, a former BPI employee who ABC referred to as the "number two" person but BPI claims was just a quality assurance employee who was fired due to his refusal to follow through on the company's "decision to promote more rigorous safety procedures in the beef industry," according to the lawsuit.

ABC News is likely to raise a number of defenses in the case, one of which could include the "fair report privilege". ABC could invoke this privilege to the extent it relied on government documents and statements from public officials.

If BPI is hoping for a quick settlement in the lawsuit, it is likely to be disappointed. Charles Tobin, a lawyer with Holland & Knight's National Media Practice Team, said settlements in these kinds of cases are rare.

"Most media companies strongly stand behind their journalism," said Tobin, former in-house counsel of Gannett Co., Inc., the publisher of USA Today and owner of other newspapers and TV stations. "They anticipate a certain amount of push back before they go to air.

Handman, who has defended media companies and journalists in a number of defamation and liable claims, said these lawsuits often are dismissed through motions before they make it to a trial. She also noted settlements are atypical. "Settlement is unusual particularly in these kinds of important cases," she said.

Patrick M. Garry, a professor at the University of South Dakota School of Law, acknowledged some hurdles BPI faces in prevailing on some of its claims. But he declined to speculate on how a jury in Union County, S.D. might be inclined to decide the case should it go the distance.

"You never really know what the jury is going to be," he said. "Often times, juries don't carry what we think of as political notions into a jury box."

The case is Beef Products, Inc., BPI Technology, Inc. and Freezing Machines, Inc. v. American Broadcasting Companies, Inc., ABC News, Inc., Diane Sawyer, Jim Avila, David Kerley, Gerald Zirnstein, Carl Custer and Kit Foshee.