By Howard Kurtz
Washington Post Staff Writer
Saturday, December 21, 1996; Page A07
A federal jury in North Carolina yesterday found ABC committed fraud and trespassing in a "PrimeTime Live" undercover investigation of Food Lion.
But in a limited victory for ABC, U.S. District Judge N. Carlton Tilley Jr. ruled that the supermarket chain cannot seek damages for lost business caused by the 1992 broadcast. The company may seek punitive damages related to the fraud conviction, however, when the trial's second phase begins.
The verdict, after six hours of deliberation, focuses new attention on the sort of deceptive techniques that two ABC producers used to obtain jobs with the supermarket chain and shoot hidden-camera footage of allegedly unsanitary practices.
"The truth of the `PrimeTime Live' report on Food Lion was not questioned in this trial," ABC spokeswoman Eileen Murphy said from Greensboro, N.C. "Instead, Food Lion chose to challenge only the way in which `PrimeTime Live' obtained information about their stores." She said undercover operations are not done "lightly" but are sometimes "necessary to bring stories of real importance to the public's attention. . . . Food Lion is asking the jury to punish the messenger without challenging the message."
But Food Lion attorney Richard Wyatt Jr. said by telephone that "it's an enormously important verdict. What it says to the media is that the media, like anyone else, has to respect the laws in various states. That should have an effect on news-gathering techniques."
Wyatt said he was "disappointed" in the ruling on damages but that Food Lion still plans to seek "substantial" punitive damages "to deter illegal conduct" by news organizations.
The 1,100-store chain says it lost $1.5 billion in stock value and $233 million in profits after the Nov. 5, 1992, broadcast, which charged Food Lion with doctoring and bleaching spoiled meat and fish for sale. The company disputes those charges.
The verdict was the second legal setback in three days for ABC. On Wednesday, a Miami jury ordered the network and one of its producers to pay a Florida banker $10 million in a libel suit over a "20/20" broadcast.
The Food Lion suit, which did not involve libel, turned on the kind of hidden-camera probe that has become a staple of network newsmagazine shows. One ABC producer, hired as a meat wrapper, kept a miniature camera in her wig and taped the microphone to her chest. ABC acknowledged that its producers lied to get their Food Lion jobs but said this was justified by the story's importance.
The jury found that ABC committed fraud because corporate attorney Jonathan Barzilay gave the reporters the green light to pursue the undercover probe.
The producers hired as Food Lion clerks, Lynne Dale and Susan Barnett, were found to have committed fraud, trespass and breach of loyalty, a reference to Food Lion's contention that they didn't do their supermarket jobs. Also found to have committed fraud were Richard Kaplan, then executive producer of "PrimeTime," and ABC producer Ira Rosen.
ABC's Murphy said the verdict was unrelated to videotaped "outtakes" that Food Lion says shows the producers orchestrating some of the unsanitary conditions. "There was no staging by any of the people involved in the case. We staged nothing," Murphy said.
But Wyatt said the videotapes were "very influential" in the outcome. "The jury saw dozens of clips of what we call staging," he said.
When the jury returns Dec. 30, it must assess the degree of fraud by Dale and Barnett in submitting job applications, claiming previous grocery experience and working for the chain while employed by ABC.
But Food Lion, which had planned to seek up to $2.5 billion in punitive damages, now must limit its damage arguments to the narrower realm involving the producers' conduct.
© 1996 The Washington Post Company
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