BPI seeks $1.9B from ABC in pink slime case
June 7, 2017
All eyes are on Elk Point, S.D., this week as the long-awaited and highly anticipated lawsuit against ABC Broadcasting and reporter Jim Avila officially began on June 5, 2017.
The $1.9 billion defamation lawsuit was filed by Beef Products Inc. (BPI) following a series of 14 ABC News stories about BPI's lean, finely textured beef (LFTB) products aired. Referring to the beef product as "pink slime," BPI said the resulting backlash against the company resulted in a loss of 80 percent of its revenue, the closure of three of its four plants and hundreds of people losing their jobs.
"That success took about 30 years to succeed and it took ABC less than 30 days to severely damage the company," said Dan Webb, BPI's attorney.
Believed to be the largest civil trial suit in South Dakota's history, BPI is seeking the large sum because of the $700 million in lost profits and $1.2 billion in lost business value the company experienced following the ABC series. Because of the South Dakota's Agricultural Food Products Disparagement Act, BPI could potentially be awarded $5.7 billion due to statutory damages, on top of additional punitive damages.
“‘Pink slime’ is Dr. [Gerald] Zirstein’s opinion of what LFTB looked like in the production process after he actually went to BPI’s plant and did a tour in 2002 and after he talked to a BPI employee and referred to the product as goop.” Dan Butswinkas, ABC’s attorney
To put the numbers in perspective, consider this. According to Eriq Gardner for The Hollywood Reporter, "It's a sum so great that The Walt Disney Co., parent of ABC, has included this lawsuit — and no other lawsuit — in 10-Q reports to shareholders filed with the Securities & Exchange Commission. That means Disney sees the outcome as potentially 'material' to its bottom line. But maybe $5.7 billion lacks concrete associative value, so consider that the amount is equivalent to roughly nine months of Disney's broadcast revenue. Or seen another way, if BPI did manage to score just half of the damages being claimed, it could buy up all the stock in The New York Times Co. (market cap: $2.8 billion at present) notwithstanding the poor wisdom of investing in a media outlet upon a judgment like this."
A 12-person jury will listen to both sides of the case in the Union County Court, which is expected to last eight weeks. The Sioux City Journal reported that nearly 100 people including lawyers, journalists and spectators filed into the courtroom to listen to the first day's proceedings.
"On March 26th, there was a press conference BPI held at headquarters in Dakota Dunes and they had to stand before news cameras and had to announce they lost 75 percent of their business because of what ABC had done and had to close three out of four of their production centers," said Webb to the jury. "So the mood was different at BPI, but you're going to see the e-mails and the e-mails at ABC were gleeful…for what they had done."
Webb added, "They ignored the proper name. When you have a major news organization that is calling the product 'slime,' witnesses will say they can't imagine anything worse. It connotes something disgusting, inedible."
ABC's attorney Dan Butswinkas countered that ABC didn't coin the term, "pink slime." What's more, he said other media outlets had used the term more than 3,800 times before ABC News started reporting on BPI's LFTB.
Butswinkas told the jury, "'Pink slime' is Dr. [Gerald] Zirstein's opinion of what LFTB looked like in the production process after he actually went to BPI's plant and did a tour in 2002 and after he talked to a BPI employee and referred to the product as goop."
Butswinkas argued that the ABC News series wasn't about just food safety but also about improper labeling with the USDA.
Yet, in a large campaign to try to save its reputation and regain customers such as McDonald's and school lunch programs who had dumped LFTB from their menus, BPI launched the phrase, "Dude, It's Beef," with a corresponding website to explain what this product really is.
So what exactly is LFTB? For starters, it's a modern food production technology that allows more lean beef to be harvested from each animal.
According to BPI's website, "It all starts with the raw materials. So, we've partnered with the best beef producers in the world to supply our beef. It's all fresh, USDA inspected, and produced using proven/validated food safety systems. Beef comes to us in the form of trim. Beef trim is the meat and fat remaining after larger cuts of beef have been 'trimmed' to meet customer specifications and is most frequently used to make ground beef.
"The process of converting the incoming trim into lean finely textured beef uses very specialized equipment like centrifuges, as well as our pH enhancement process. We remove the fat from the beef, leaving a finished lean beef that is typically 94 – 97% lean, and is a key ingredient to making low fat ground beef or any other food where lean finely textured beef is essential.
"In addition to ensuring great tasting beef, our methodology also enables us to consistently produce meat that is of the absolute highest quality. Our state of the art food safety systems and processing innovations give our customers absolute confidence that they are getting the finest lean finely textured beef products available today. Our process produces meat with a higher pH, which reduces the number of potential pathogens that may be present such as E. coli 0157:H7."
LFTB is commonly found in fresh retail ground beef, fresh and frozen hamburger patties, low-fat hot dogs, taco meats, lunch meats, chili, beef sticks, sausages, pepperoni, retail frozen entrees, meatballs, roast beef and canned foods.
Webb told the jury that between March 7 and April 3, 2012, ABC used the term "pink slime" more than 350 times across six different media platforms starting with its first installment, "Pink Slime Meat In School Lunches — What Is Really In There & Is It Safe?"
In a court filing, Avila wrote, "The focus of this potential story shifted from the possibility of influence or corruption to the fact that the consuming public was unaware that 70% of the ground beef sold in supermarkets contained this highly processed, ammoniated product."
With consumer outcry escalating following the reports and the closing of three of BPI's four plants, Avila appeared to attempt to tame down the rhetoric with a March 27, 2012 article titled, "Beef Products Inc. Comeback: It's Not 'Pink Slime'; It's Safe, Nutritious and 'It's Beef.'"
But it was too little too late. The damage had been done. And despite the safety of BPI's 100% beef product, ABC contends that it was accurate in its reporting.
According to Timothy McLaughlin and P.J. Huffstutter for Reuters, Butswinkas told the jury that BPI had lobbied for years to get LFTB added to ground beef without labels to indicate that it was there. He said, "Until the secret started to get out to consumers, no one knew that there was a product treated with ammonia in their traditional ground beef."
Considering the politics of the case and the location of the trial, McLaughlin and Huffstutter write, "The trial is being held in Elk Point, about 20 miles north of BPI's headquarters, which employs 110 people. Roughly 6 percent of the area labor force is involved in agriculture and related industries, according to the local chamber of commerce. Election records show 67 percent of the U.S. presidential vote in Union County, where Elk Point sits, was won by Trump, who uses the term 'fake news' to argue that some mainstream media outlets cannot be trusted."
Although it's unclear whether BPI will go the "fake news" route, BPI must prove that ABC and Avila intended to harm the company with its reporting on "pink slime."
The sleepy South Dakota town will be booming this summer. Reuter reports that, "To make room for overflow crowds, the county commission earmarked $175,000 to turn the Union County Courthouse basement into an enlarged courtroom and move records into a specially constructed separate building."