A year ago, Beef Products Inc. had four state-of-the art plants, more than 1,300 employees and was expanding aggressively.The meat company was the leading maker of "lean finely textured beef," a low-fat product made from chunks of beef, including trimmings, and exposed to tiny bursts of ammonium hydroxide to kill E. coli and other dangerous contaminants. Few Americans realized the product was a mainstay of fast-food burgers, school lunch tacos and homemade meatloaf.
Today, the South Dakota company's revenues have plummeted from more than $650 million to about $130 million a year, and three of its plants are shuttered. Company officials blame the abrupt falloff on a series of ABC News broadcasts that began last March - stories that repeatedly called its product "pink slime."
BPI hired a high-powered Chicago trial lawyer and in September slapped the network, star anchor Diane Sawyer and other defendants with a 27-count lawsuit that seeks at least $1.2 billion in damages - about one-fifth of the fiscal 2012 net income of American Broadcasting Co parent Walt Disney Co. Now, the case, which many observers initially wrote off as a public relations ploy by a desperate company, is shaping up as one of the most high-stakes defamation court battles in U.S. history.
The court fight could put modern television journalism on trial and highlight the power of language in the Internet Age: In the wake of the reports on "World News with Diane Sawyer," the term "pink slime" went viral.
The case also underscores an intensifying war between the farm sector and its critics over how food is made. In Europe, for instance, an uproar has erupted over the inclusion of horsemeat in a variety of products. Although the media furor over "lean finely textured beef" has waned in the U.S., the economic ripple effect is still being felt by the nation's meat-packers and ground beef manufacturers, which are wrestling with a dwindling cattle supply and rising meat prices - and are now slowly reintroducing products similar to LFTB into the marketplace.
Libel cases are extremely difficult to win in the U.S. because of strong press protections, and ABC has compelling legal arguments. However interviews with BPI's founders, agriculture industry officials and legal experts, as well as a review of federal documents and court records, suggest that ABC's reports had certain flaws that could resonate with a jury: ABC's lead reporter on the story mischaracterized BPI's product on Twitter; the network failed to clearly describe on-air how the company's beef wound up in the nation's food supply; and ABC did not reveal in an interview with a former BPI employee that he had lost a wrongful termination lawsuit against the company.
ABC denies the allegations in the lawsuit and is seeking to have it thrown out. The network and its lawyers at Washington D.C. law firm Williams & Connolly declined to comment on the case. In court papers, the network argues that the lawsuit is a bid by BPI to chill media coverage of the food industry.
The case also could shine an unflattering light on BPI. Many consumers find the notion of processed beef unsavory, and the lawsuit could open the door to the company having to reveal closely guarded information about its processes that could be used in other litigation.
BPI founders Eldon and Regina Roth say they plan to pursue their fight against ABC even if it takes years and tens of millions of dollars in legal fees.
"We have to do this," Eldon Roth told Reuters. "We have no other choice."
The lawsuit, originally filed in South Dakota state court, is hinged partly on a state product-disparagement statute designed to protect farming interests. Twelve other states have similar laws - dubbed "veggie libel" measures by critics - but they have rarely been invoked.
Under the South Dakota version of the law, plaintiffs must show that defendants publicly spread information they knew to be false and stated or implied "that an agricultural food product is not safe for consumption by the public."
If BPI were to win on that claim, under the law it could be awarded triple the damages that were caused. That means that the company's claim of more than $400 million in projected lost profits could balloon to damages of more than $1.2 billion.
For BPI to prove the defamation piece of its case, it would need to show that the network negligently reported a false statement of fact that injured its reputation. If BPI is deemed by the court to be a public rather than a private figure in the legal sense, it would have a higher bar to cross: The company would need to prove ABC knew the facts it was reporting were false or it recklessly disregarded the truth.
While the case is in the early stages, the network appears to have a legal leg-up on both counts: ABC never said BPI's product is dangerous, and courts have repeatedly offered broad protections for journalists in the course of their work.
But by calling a food product "slime" 137 times over the span of nearly four weeks on its newscasts, its website and on Twitter, according to BPI's tally, did ABC make the public think LFTB was unsafe? If, as BPI alleges, ABC shrugged off information that refuted parts of its reporting, did it act recklessly and could it therefore be held liable for defamation?
"It's hard to imagine ‘slime' being a positive term, but at the same time, was it used with malice?" said Gene Policinski, senior vice president and executive director of the First Amendment Center at the Freedom Forum, a group that promotes free-speech issues. "This is going to be a very tough thing for BPI to prove."
WHAT EXACTLY IS "SLIME"?
At the crux of the debate are two little words: "pink slime."
The term is believed to have been coined as a description for LFTB by a U.S. Department of Agriculture scientist who used it in a 2002 email to colleagues after touring a BPI plant. The phrase came to light in December 2009 when the New York Times published a story by Pulitzer Prize-winner Michael Moss that cited the email. The story discussed BPI's technology and effectiveness in preventing the spread of food contaminates.
BPI did not sue the Times. That story, and subsequent media reports that referred to the term, "were not causing any damage to the company," said BPI's attorney, Dan Webb, chairman of law firm Winston & Strawn and a former U.S. Attorney in Chicago.
But, Webb contends, ABC's use of "pink slime" so many times - combined with alleged misstatements and omissions - made consumers believe the company's beef was something foul.
That's led lawyers for ABC and BPI to pull out their dictionaries in a duel over the definition of slime.
BPI's lawyers point to the Oxford Dictionary, which describes slime as a "moist, soft, and slippery substance, typically regarded as repulsive," and the American Heritage Dictionary, which calls it "vile or disgusting matter."
But ABC's lawyers, in their motion to dismiss the case, argued that slime is a fitting description of the company's product. They point to "more neutral" definitions of the term, citing another entry in the American Heritage Dictionary that calls slime a "thick, sticky, slippery substance."
And regardless, ABC's lawyers also argue, use of the term was the kind of "rhetorical hyperbole" that is constitutionally protected. They point out that courts have rejected defamation claims based on allegations of "name calling."
Restaurant reviewers, they note, have been protected over speech that describes food in unpleasant ways. One example the network's lawyers have held up for comparison: A 1977 court ruling that found a reviewer who called a dish "trout a la green plague" and a sauce "yellow death on duck" had not defamed a Louisiana restaurant owner.
One issue in dispute in this case: the circumstances around the U.S. Department of Agriculture's approval of using LFTB in the making of ground beef. In ABC's first broadcast on the subject on March 7, the network said that former Assistant Secretary of Agriculture Jo Ann Smith was appointed to the board of directors of a large BPI supplier after she "made the decision to okay" BPI's "mix."
H. Russell Cross, a former head of USDA's Food Safety and Inspection Service, told Reuters he, not Smith, made a pivotal decision in mid-1993 that "lean finely textured beef" was beef, and therefore did not need to be labeled in packages of ground beef. "She had nothing to do with it," he said.
Moreover, it wasn't until 2001 that the company secured USDA approval for its use of ammonium hydroxide as a processing aid, according to a document Reuters obtained through a Freedom of Information Act request.
Smith, who had left the agency by early 1993, could not be reached for comment. Cross left USDA in 1994 and is now head of the department of animal science at Texas A&M University. BPI said Cross "did some consulting work" on its behalf about nine years ago; Cross, who was employed by a large beef packer at the time, says he was not paid by BPI.
