by: Dustin Blitchok, Benzinga Staff Writer
A beef manufacturer’s defamation lawsuit against ABC — which could reap $5.7 billion in damages if successful — has been named by Walt Disney Co DIS as its most significant legal contingency.
A trial began Monday in Beef Products, Inc.’s lawsuit against ABC over a 2012 report that termed the company’s lean, finely textured beef as “pink slime.”
Beef Products is claiming $1.9 billion in losses due to reporter Jim Avila’s story, a number that could be tripled under a South Dakota law that allows for treble damages, according to Reuters.
What Is Pink Slime?
The term “pink slime” originates with former Agriculture Department scientist Gerald Zirnstein, who used it in an email to coworkers that expressed concerns about lean, finely textured beef, according to The New York Times.
Lean, finely textured beef is found in 70 percent of ground beef sold in U.S. supermarkets, according to ABC News, and is made from trimmings and treated with ammonia to reduce bacteria.
Beef Products’ lawsuit against ABC accuses the broadcaster “of falsely suggesting that the product was, among other things, ‘pink slime,’ a ‘filler’ ingredient, low quality, not beef [and] not safe for public consumption,” according to the newspaper.
"The U.S. Department of Agriculture has called BPI's product safe," Reuters reported. "But some retailers, including Wal-Mart Stores Inc WMT, stopped selling ground beef containing it after the ABC reports."
What Does It Mean For Disney?
Disney is unable to predict the outcome of the lawsuit or what losses it might suffer, the company said in a quarterly filing with the Securities and Exchange Commission.
“Management does not believe that the company has incurred a probable material loss by reason of any of the above actions.”
The entertainment conglomerate told Reuters in a statement it welcomes the opportunity to defend the ABC story at trial “and are confident that we will ultimately prevail.”
The trial comes a year after a $140 million invasion-of-privacy verdict awarded to wrestler Hulk Hogan led Gawker Media Group to seek bankruptcy protection. Hogan sued the online publisher after it posted his sex tape in a case that had financial backing from billionaire Peter Thiel.
The trial is being held at the Union County Courthouse in Elk Point, South Dakota, and could last eight weeks, according to The Hollywood Reporter.
The trade publication raised the issue of what effect the trial’s location in a heavily Republican part of the country could have on the case’s outcome, given the outcry against “fake news” and shifting attitudes toward the media.
“It’s ABC’s poor fortune to spend five years fighting this case only to go to trial at the very moment that Donald Trump is calling the media the ‘opposition party,’” wrote reporter Eriq Gardner.
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