Why ABC News Settled a Multibillion-Dollar Suit Over ‘Pink Slime’

Defamation in the “fake news” era

Faced with a potential $5.7 billion verdict, ABC News last week settled a lawsuit brought by a South Dakota meat company objecting to negative coverage of a beef product critics have called pink slime. The pact—the terms of which were kept confidential—came in the middle of what had been scheduled to be a long trial. 

The beef industry prefers to call the additive in question “lean, finely textured beef,” or LFTB. It’s made from fat trimmings containing bits of meat, which are heated and spun to separate out the beef. Small amounts of ammonia gas are used in the process to eliminate harmful bacteria. So far as anyone can tell, a U.S. Department of Agriculture microbiologist coined the term pink slime in a 2002 email. It doesn’t sound appetizing, but the USDA and consumer advocacy groups have said the stuff is safe to consume.

Dakota Dunes-based Beef Products Inc. sued ABC in 2012 after the network reported that LFTB, which BPI processed and sold, was added as a filler to 70 percent of the ground beef sold in U.S. supermarkets, and that this fact wasn’t disclosed on labels. Beef Products accused ABC of maligning the company by calling LFTB pink slime and falsely implying that it isn't beef and isn't safe. The fallout from ABC’s coverage and that of other news outlets was dramatic. Fast-food chains stopped using the filler. Consumers petitioned the USDA to keep it out of the federal school lunch program. Beef Products suspended production at three of its plants. In court filings, it estimated its damages at $1.9 billion. Under a South Dakota law prohibiting disparagement of agricultural products, that amount could have been tripled to $5.7 billion. 

Five years after it was filed, the Beef Products suit went to trial. The company and ABC, a unit of Walt Disney Co., jousted for 18 days in state court in Elk Point, S.D. (pop. 1,940) before announcing their settlement. The proceedings had been scheduled to last until mid-July.

It can be perilous to speculate on confidential legal resolutions, but the timing of the agreement strongly suggests that the network didn’t like how the evidence was unfolding and was worried about how a small-town jury would regard the woes of a home-state business facing off against a giant out-of-state corporation.

Among the Beef Products witnesses the jurors heard from were well-credentialed food scientists who testified that referring to pink slime was inaccurate, that the company had stringent food-safety procedures, and that LFTB has similar nutritional value to regular ground beef. In fact, adding LFTB reduces the overall fat content of ground beef. (South Dakota Public Broadcasting summarized the testimony here, here, and here.) ABC’s lawyers cross-examined the Beef Products witnesses, of course, but the network threw in the towel before getting to its own evidence.

Another possible factor in the decision to settle: The trial played out at a time when President Donald Trump has declared the media an “enemy of the American people” and on a daily basis hurls accusations of “fake news” at media organizations he dislikes. While jurors in the beef case were screened for bias before being selected, ABC may have justifiably feared a subconscious animus toward the media. (Trump beat Hillary Clinton in South Dakota by a 30-point margin.)   

The news network tried to spin the settlement as a positive. “ABC has reached an amicable resolution of its dispute with the makers of ‘lean finely textured beef,’” spokeswoman Julie Townsend said via email. She added that ABC stood by the accuracy of its reports and remained “committed to the vigorous pursuit of truth and the consumer’s right to know about the products they purchase.” For its part, Beef Products said in a statement, “this agreement provides us with a strong foundation on which to grow the business.”

Media-law experts warned that the ABC-Beef Products agreement could dissuade media from pursuing essentially accurate coverage companies don’t like. “A settlement like this can encourage the filing of frivolous lawsuits,” says Jane Kirtley, a professor of media ethics and law at the University of Minnesota. “I am sorry that ABC decided to settle a case for which I thought they had viable and credible defenses” under the First Amendment. Three of those defenses were that the reports were “substantially” true, that they were published without “actual malice,” and that they constituted “opinion,” which receives heightened First Amendment protection.

With billions on the line, ABC, doubtless aware of these legal arguments, decided to stand down anyway.

    Paul Barrett
    Former Bloomberg Businessweek Columnist
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