Appeals court reverses fraud verdict against ABC in Food Lion Case

RICHMOND, Va. (AP) -- A federal appeals court on Wednesday<br>reversed a jury verdict that found ABC committed fraud in a<br>hidden-camera expose of unsanitary conditions at Food Lion's<br>supermarkets.<br>

Wednesday, October 20th 1999, 12:00 am

By: News On 6

RICHMOND, Va. (AP) -- A federal appeals court on Wednesday
reversed a jury verdict that found ABC committed fraud in a
hidden-camera expose of unsanitary conditions at Food Lion's
supermarkets.

The 4th U.S. Circuit Court of Appeals, with a 2-1 ruling, threw
out a $315,000 judgment against ABC over a 1992 "PrimeTime Live"
story.

Two ABC reporters used false resumes to get jobs at a Food Lion
store, then secretly videotaped employees for a story on
food-handling practices that accused the grocery chain of selling
rat-gnawed cheese and rotting meat.

The report alleged that Food Lion employees ground out-of-date
beef along with new beef, bleached rank meat to remove its odor and
redated products not sold before their expiration date.

The jury that found ABC guilty of fraud under state law awarded
the supermarket chain $5.5 million in punitive damages, but that
was cut to $315,000 by a federal judge.

Food Lion was also awarded $1,402 in compensatory damages for
the cost of hiring the two ABC employees.

Both ABC and Food Lion had appealed.

The award stunned some because it appeared to open a new line of
legal attack against the news media and hidden-camera journalism
that did not center on the veracity of the story.

The appeals court disagreed with the jury's finding that ABC
engaged in a business deception in violation of the North Carolina
Unfair and Deceptive Trade Practices Act, or UTPA.

"However, the deception ... did not harm the consuming public.
Presumably, ABC intended to benefit the consuming public by letting
it know about Food Lion's food handling practices," said the
opinion by Judge M. Blaine Michael.

"Moreover, ABC was not competing with Food Lion, and it did not
have any actual or potential business relationship with the grocery
chain," so the law could not be used in this case, Michael wrote.

A spokeswoman for ABC News did not immediately return a
telephone call for comment.

Although Food Lion denied the story's accuracy, it did not go
after ABC for libel or slander. Instead, it sued for fraud,
trespass and breach of the duty of loyalty, saying undercover
reporters lied to get jobs and then wore spy cameras and hidden
recorders.