A few months ago, I wrote about a $1.2 billion defamation lawsuit filed by Beef Products, Inc. (BPI), a South Dakota-based meat processor, against ABC News Inc. found here. The most recent development in the case occurred on October 31 when lawyers for ABC filed a motion to dismiss.
In September, BPI, along with Technology, Inc. and Freezing Machines, Inc., collectively filed suit against American Broadcasting Companies Inc., ABC News Inc., ABC news anchor Diane Sawyer and ABC correspondents Jim Avila and David Kerley in Circuit Court in Union County, South Dakota claiming that ABC’s news coverage of lean finely textured beef (LFTB), or what became infamously known by the nickname “pink slime,” was defamatory and ultimately devastating for the company’s reputation and business. Since being filed, the case has been removed (PDF) to the U.S. District Court for the District of South Dakota. The complaint also named as defendants Gerald Zirnstein, the U.S. Department of Agriculture (USDA) microbiologist who called the product “pink slime,” Carl Custer, former federal food scientist, and Kit Foshee, a former BPI quality assurance manager who was interviewed by ABC.
Earlier this year, on March 7, 2012, ABC began reporting during its World News program that much of the ground beef we buy at the supermarket contains the product that the industry calls LFTB and others call “pink slime.” Over the next month, ABC continued to report on the story, both online and on its television news programs.
In its later complaint, BPI alleged that the news agency, in reporting on LFTB, had knowingly and intentionally published false and disparaging statements regarding BPI and its product and improperly interfered with BPI’s business relationships. BPI argued that the statements made by ABC were not only inconsistent with information provided to them by BPI but were also contradictory to the findings of the USDA’s Food Safety and Inspection Service (FSIS), the Food and Drug Administration (FDA), food safety organizations, and many beef industry experts. BPI claimed that ABC’s news reports constituted common law defamation, product disparagement, and tortious interference. In addition, BPI alleged a cause of action under South Dakota’s statutory Agricultural Food Products Disparagement Act (AFPDA).
Most recently, on October 31, 2012, lawyers for ABC News submitted a motion to dismiss BPI’s lawsuit (PDF). In its memorandum in support of the motion to dismiss, ABC asserts that none of BPI’s claims are viable. Specifically, ABC argues that BPI cannot state a claim under South Dakota’s AFPDA, because that law only authorizes an action for statements that question the safety of a product. ABC claims that it did not question the safety of the product as BPI claims, but instead stated that LFTB is safe to eat.
Secondly, ABC maintains that BPI cannot state a claim for product disparagement because “any such claim is preempted by AFPDA, and because the ABC News reports would not be actionable under traditional common law standards in any event.” For instance, ABC explains:
[R]eporting that critics call LFTB pink slime is not actionable: that term, while unflattering, does not convey false facts about the color or texture of LFTB and is precisely the kind of “imaginative expression” and “rhetorical hyperbole” that is constitutionally protected. And the ABC News reports cannot reasonably be understood to imply that LFTB is “not safe for public consumption” or “not nutritious.” The reports repeatedly state that LFTB is “safe to eat,” though “not as nutritious as ground beef” a viewpoint BPI does not challenge. BPI’s other claims are based on quibbles with specific language that do not affect the “substance” or “gist” of the reports.
Lastly, ABC states that BPI’s claims of libel and of tortious interference with business relationships both fail. A decision on the motion is currently pending.
As we've discussed previously in this blog, the Supreme Court's plausibility pleading standard, as articulated in the Iqbal and Twombly cases often provides a rapid (and relatively inexpensive) pathway to defeat consumer fraud claims.
At the ACI food regulatory conference last week, we discussed a strategy to take advantage of the plausibility pleading standard in jurisdictions that have liberal class certification standards.
In states where individualized reliance or causation is required to make out consumer fraud or unfair trade practices claims, defendants’ first line of attack may be class certification. But where individualized reliance and/or causation is not required, courts will often deny class certification under Rule 23(b) because common issues of law or fact do not predominate over individual issues.
So here's a strategy in jurisdictions where a defeat of class certification may not work:
- In states where plaintiffs need not show individualized reliance/causation, they may still have to demonstrate that an objectively reasonable consumer would have been damaged by the marketing/advertising campaign.
- The Supreme Court in Iqbal/Twombly said that a court must disregard conclusory allegations and scrutinize the complaint's factual allegations to determine whether it nudges the alleged wrong-doing "across the line from conceivable to plausible." The complaint must have meat on its bones. In the case of a consumer fraud class complaint, plaintiffs’ counsel, to survive a motion to dismiss, should need to include references to evidence or other substantiation for the claim such as consumer surveys or perhaps a government finding.
- Without a strong factual basis as to how an "objectively reasonable consumer" might behave, consumer fraud/unfair trade practices putative class claims concerning the marketing of a food product may be in jeopardy. Defendants should take advantage and seek dismissal at the outset of the case.