Disney’s quarterly report provides information on ABC-BPI settlement

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In September 2012, South Dakota meat processor Beef Products, Inc. (BPI) sued ABC for defamation over the news agency’s reports concerning a meat additive called Lean Finely Textured Beef (LFTB), which became widely known as “pink slime” following ABC’s story. The suit claimed that the network’s extended coverage of LFTB throughout March 2012 falsely indicated that the product was unsafe, unhealthy, and “not even meat” (Reuters’ words).

BPI sought $1.2 billion in damages, alleging that ABC’s coverage of LFTB cost the beef company “hundreds of millions of dollars in profit and roughly half its employees” (Reuters’ words). Indeed, several major players in the food industry, including Wendy’s, McDonald’s, Wal-Mart, ConAgraFoods, SaraLee, and Kraft took steps to distance themselves from LFTB, which BPI calls its “signature beef.”

The case bounced around the court system for years before going to trial in Elk Point, South Dakota on June 5. On June 28, while the trial was in process, ABC and BPI reached a settlement, the amount of which was not disclosed.

In its most recent quarterly earnings report, published Tuesday, Disney, ABC’s parent company, reported a $177 million “charge…incurred in connection with the settlement of litigation.” Radio Iowa noted that the report mentioned no case aside from the BPI agreement, and therefore surmised that Disney settled with BPI for $177 million.

However, BPI’s attorney, Dan Webb, said in a statement that “$177 million is not the total settlement amount,” and that, “based on Disney’s disclosure, it appears that Disney is funding 177 million dollars of the settlement and its insurers are paying the rest.”

Webb told CNN following the settlement that BPI was “extraordinarily pleased to have reached a settlement.”

BPI maintains that its case was justified, but has indicated that the legal process was growing burdensome. Webb says the case was “a long road to travel for BPI,” and that the settlement “allows [the company] to grow [its] business back.”

Webb says he and BPI “felt the trial was necessary to rectify the enormous financial harm” the company had suffered,” and “we’re looking forward to taking the case all the way to the verdict,” Webb says. He believes the evidence he presented on behalf of BPI and LFTB was well-received by the jury, CNN reports.

ABC, like BPI, stands by its case but is pleased to be free of the burdens of litigation.

“Throughout this case, we have maintained that our reports accurately presented the facts and views of knowledgeable people about this product,” the company said in a statement. “Although we have concluded that continued litigation of this case is not in the Company’s interests, we remain committed to the vigorous pursuit of truth and the consumer’s right to know about the products they purchase.”

Much of ABC’s report on LFTB was based on the statements of Gerald Zirnstein, a former USDA scientist. In 2002, Reuters says, the USDA tasked Zirnstein with analyzing the constitution of ground beef to ensure that ingredients met federal regulations.  LFTB was among the products he examined. According to ABC, he found among other things, that the product, use of which had previously been constrained to cooking oil and dog food, was treated with ammonia. (You can view a brief snippet of ABC’s 12-part report on LFTB here).

When the USDA approved the product, Zirnstein sent an e-mail to a co-worker in which he coined the term “pink slime.” That e-mail went public, and Zirnstein became an “involuntary whistleblower,” CNBC report

“The whole thing went viral … Just blew the top off everything,” said Zirnstein per CNBC.

According to BPI’s website (link above), LFTB “is simply the lean beef trimmed from sirloins, ribeyes and other whole muscle cuts.” The product, says BPI, is “100%” beef, and is free of organs tendons, bones and fillers.”

Disney reported $14.2 billion in revenue; that figure is identical to the one reported in the same quarter last year. However, net income fell 9% year over year to $2.37 billion, while earnings per share (EPS) fell 5% to $1.51.

Moreover, CNN cites Webb as saying “he believes the plaintiff’s evidence was well-received by the jury, and that the trial ‘vindicated’ the lean, finely textured beef product” (paraphrased by CNN).

Featured image via Flickr/U.S. Department of Agriculture

I'm Will Black. Pleased to meet you. In case you haven't noticed, there’s a lot happening on this 8,000-mile-wide sphere we’re all stuck on together. There’s plenty going on in each 22.5 inch wide sphere that rests upon a human being’s shoulders, too. I’ve heard every broken record that plays in my own personal 22.5’’ sphere. Writing, for me, is an opportunity to smooth over the ticks and pops on those records, and an effort to understand and lend expression to the myriad phenomena going on in everybody else’s little sphere. If I do that work properly, our ride through space on this big blue sphere should be a little more worthwhile, or at least a little more tolerable.

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