U.S. Jury Finds ABC Used Fraud in Supermarket Expose

Opening a new line of legal attack against the media, a federal jury on Friday ruled that ABC committed fraud in sending reporters to go undercover as Food Lion employees for a “PrimeTime Live” expose on the supermarket chain.

The jury was told to return on Dec. 30 to decide whether to award Food Lion damages.

It was the second setback for the network in court this week. In Miami on Wednesday, a savings and loan executive who claimed “20/20” portrayed him as a crook won $10 million in a libel suit against ABC.

In the Food Lion case, the jury found that the network and four news producers committed fraud and trespass to get a story about allegedly unsanitary practices at the supermarket chain.

In a victory for ABC, U.S. District Judge Carlton Tilley said Food Lion cannot seek damages for lost business attributable to the broadcast. However, Food Lion can seek compensatory and punitive damages from events prior to the broadcast.

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Food Lion contended the broadcast cost it $1.7 billion to $2.5 billion in lost sales and stock value; it has not said how much it will seek in punitive damages.

The Food Lion case had put hidden-camera journalism on trial and was closely watched by companies and news organizations for taking up the question of whether journalists can pose as employees of a business to get in the door.

Legal experts said the case could open a new line of attack for companies that get hurt by exposes.

“It’s an important decision because some type of deceptive reporting goes on all the time. That’s how news is broken,” said David Hudson, an attorney with the First Amendment Center in Nashville.

He said the case may persuade corporations to forgo costly, difficult-to-win libel suits in favor of other avenues of legal attack.

“The libel actions have almost been pretty hard to bring. What this means is that people will bypass bringing libel action and settle for other tort theories,” he said.

In a statement, ABC defended how it reported the story.

“We never engage in undercover activities lightly, but sometimes they are necessary to bring stories of real importance to the public’s attention. Our report on Food Lion was such a story,” the network said.

Noting that Food Lion mostly challenged the way in which the information was gathered, rather than the information itself, the network said, “Food Lion is asking the jury to punish the messenger without challenging the message.”

Food Lion attorney Richard Wyatt Jr. said: “Certainly, we would hope the media would be mindful of this decision and accept it as establishing some appropriate guidelines and limitations. I have no idea whether it will actually change investigative reporting.”

Food Lion, with more than 1,100 stores in 14 states, mostly in the South, had sued over a 1992 hidden-camera report that showed unsanitary conditions at the supermarket, including rat-gnawed cheese and spoiled chicken washed in bleach.

For the expose, two ABC producers got hired as Food Lion employees and used cameras hidden in their wigs and tape recorders concealed in their bras.

Food Lion denied the allegations of unsanitary practices and sued--not for libel, but for fraud and trespassing, alleging the two producers lied to get their jobs and spent company time snooping around instead of performing the Food Lion duties for which they were being paid.

The jury said the two “PrimeTime Live” producers, Lynne Dale and Susan Barnett, committed fraud, breach of loyalty and duty and trespass.

The jury had to decide three questions regarding Dale and Barnett, specifically whether it was deceptive to submit applications, to work for Food Lion while employed by ABC and to state that they had previous grocery store experience. It answered yes in all three cases.

Also found to have committed fraud were Richard Kaplan, executive producer of “PrimeTime Live” at the time the story aired, and Ira Rosen, another ABC producer.

ABC itself was found to have committed fraud through the actions of attorney Jonathan Barzilay.

It was Barzilay who gave the “PrimeTime Live” reporting team the legal advice to go ahead with the undercover operations.