FOOD LION WINS $5.5 MILLION DAMAGES VS. ABC

SALISBURY, N.C. -- Food Lion here ended a four-year quest for vindication last week when a federal jury in Greensboro, N.C., ordered ABC News and two ABC producers to pay the chain $5.5 million in punitive damages.ABC said last week it would "seek review of [the] verdict through all available avenues of appeal."Food Lion's legal action stemmed from a hidden-camera report on ABC-TV's "PrimeTime Live"

SALISBURY, N.C. -- Food Lion here ended a four-year quest for vindication last week when a federal jury in Greensboro, N.C., ordered ABC News and two ABC producers to pay the chain $5.5 million in punitive damages.

ABC said last week it would "seek review of [the] verdict through all available avenues of appeal."

Food Lion's legal action stemmed from a hidden-camera report on ABC-TV's "PrimeTime Live" in November 1992 that questioned Food Lion's sanitary handling procedures. Food Lion filed its suit against ABC in September 1992, two months before the broadcast aired. Food Lion's lawsuit did not question the accuracy of the television report, but the methods ABC used in obtaining the information, namely the use of hidden cameras operated by two producers who were hired by Food Lion as store-level employees.

In seeking punitive damages, Food Lion did not ask the jury to award a specific amount. However, Tim Barber, a Food Lion attorney, suggested to the jury in his closing arguments that damages could range from $52.5 million (the profits he said ABC earned during the 15 days the two producers worked undercover at Food Lion) up to $1.9 billion. The latter figure would represent 10% of the $18.9 billion price Walt Disney paid for ABC last year. ABC was known as Capital Cities/ABC prior to the acquisition.

Last week's award of $5,545,750 in punitive damages consists of $4 million against the former Capital Cities/ABC; $1.5 million against ABC; $35,000 against a producer; and $10,750 against another producer. The jury did not impose any damages against the two producers who worked undercover at two Food Lion stores to obtain substance for the broadcast. Tom Smith, chairman, president and chief executive officer of Food Lion, said last week, "This case was not just about money. It was about right and wrong, and the jury's first verdict [finding ABC guilty during the liability phase of the trial] was just as important to us as this decision [for punitive damages] is."

Chris Ahearn, Food Lion's manager of corporate communications, told SN last week Food Lion believes it has been vindicated by trial results.

"The jury saw some of the 45 hours of out-takes that showed the producers trying to stage scenes, and they agreed with us that they called ABC's tactics into question. If your story begins with a series of lies and has lies throughout, then it raises serious questions whether there's any truthfulness to the story once it's completed," she said.

ABC reiterated its belief last week in the accuracy of the facts and the justification for its methods in a statement released following the jury's award of punitive damages.

"Food Lion has succeeded in convincing a jury to punish ABC for using undercover investigative techniques that exposed its unsanitary practices . . . without ever challenging the truth of our broadcast," the statement said.

"Undercover journalistic techniques have proven effective for more than a century in exposing wrongdoing and in prompting needed reforms.

"When we undertook the investigation of Food Lion, its business practices were the subject of an investigation by the Department of Labor, hearings by a Congressional subcommittee and numerous lawsuits. We had reports from a number of current and former Food Lion employees about deceptive, unsanitary and unsafe food-handling practices that were said to be widespread in its stores.

"None of this evidence was heard by the jury, nor did it know about what we learned while working in the stores or what we revealed to the public.

"Food Lion never challenged either the truth or the importance of the message. If large corporations were allowed to stop hard-hitting investigative journalism, the American people would be the losers."

The jury's award of punitive damages followed a verdict by the same jury in late December that found ABC and four producers guilty of fraud; the jury also determined that the two producers who worked undercover at Food Lion to gather material for the television segment were guilty of trespassing and breach of loyalty for falsifying their resumes to get hired as store employees.

The jury subsequently awarded the chain compensatory damages of $1,402 for the money spent training the two producers as Food Lion employees.

Richard L. Wyatt Jr., a Food Lion attorney, said the company will review an earlier ruling by the trial judge that limited the scope of evidence Food Lion could present, which he said kept the jury from considering larger compensatory damages.

Food Lion has said it experienced losses in anticipated sales and equity of up to $2.5 billion in the wake of the broadcast. Food Lion's current annual volume is about $10 billion.

In a related action last week, Fox News aired out-takes from ABC's 1992 news broadcast about Food Lion. Food Lion's Ahearn told SN that Food Lion compiled the tape, given to Fox and other news outlets, that purported to show "selective editing" on the part of ABC. It anticipated the tape will receive further dissemination. ABC protested Fox's use of the material.

SN's parent, Fairchild Publications, is a unit of the ABC segment of Walt Disney Co. The majority of Food Lion's voting stock is owned by Delhaize, Brussels, Belgium.