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Speaker 1: ABC News is on trial in South Dakota, facing potential

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Speaker 1: damages of five point seven billion dollars over allegations that

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Speaker 1: made false and misleading statements about so called pink slime

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Speaker 1: in a series of news reports aired in Gerald's Ernstein

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Speaker 1: grinds his own hamburger these days. Why because this former U.

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Speaker 1: S d A scientists now whistleblower knows that of the

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Speaker 1: ground beef we buy at the supermarket contains something he

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Speaker 1: calls pink slime. Beef trimmings that were once used only

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Speaker 1: in dog food in cooking oil, now sprayed with ammonia

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Speaker 1: to make them safety eat, and then added to most

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Speaker 1: ground beef as a cheaper filler. Beef Products Inc. Alleges

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Speaker 1: that ABC's sensationalized reporting valued ratings over truth and created

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Speaker 1: a consumer backlash, causing it to lose seventy of its business,

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Speaker 1: closed three plants, and layoff hundreds of workers. ABC stands

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Speaker 1: behind its stories and says the facts will vindicate it,

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Speaker 1: joining us as Matthew Chettenhelm Bloomberg intelligence litigation analyst Matt

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Speaker 1: there have been questions about the product for years, and

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Speaker 1: in two The New York Times want a pulled surprise

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Speaker 1: for reporting on food safety, including a story about the

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Speaker 1: beef products process. Why is the plaintiff singling ABC News out? Yeah, yeah, June,

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Speaker 1: that's that's a good point, and that's something that ABC

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Speaker 1: has raised repeatedly that they weren't the first ones to

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Speaker 1: bring this up. I think what what bp I would

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Speaker 1: say is that ABC s stories. ABC ran a series

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Speaker 1: of of eleven broadcasts on this those caught on in

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Speaker 1: a way in in in sort of the public imagination

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Speaker 1: in a way that the earlier New York Times story hadn't.

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Speaker 1: And the other thing that you had going on is

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Speaker 1: is immediately before the ABC ran these stories, three of

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Speaker 1: the big fast food companies McDonald's, Burger King, and Taco

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Speaker 1: Bell had just pulled out uh and said we're not

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Speaker 1: going to use this product in our beef anymore. So,

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Speaker 1: all of a sudden, right about the time you had

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Speaker 1: these stories running, all of a sudden, bp I saw

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Speaker 1: a major impact in in in its ability to sell

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Speaker 1: this product that was otherwise doing pretty well for it. Matt,

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Speaker 1: what is it about these reports that bp I says

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Speaker 1: was libelous? So so b p I s basic claim

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Speaker 1: as is that that ABC is is basically doing a

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Speaker 1: smear job here that it's it. It refers to its product,

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Speaker 1: what it likes to call as lean finely textured beef,

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Speaker 1: as pink slime. Dozens and dozens of times it refers

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Speaker 1: to it as as as pink slime, implying that it's

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Speaker 1: disgusting in some way. It suggests or or strongly implies

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Speaker 1: that it's not nutritious, that it's not beef. And the

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Speaker 1: combination of all of those things, bp I says led

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Speaker 1: to uh major impact on its business. And is ABC's

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Speaker 1: only defense truth or which is all you really need?

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Speaker 1: Or is there more? No? So, so it's very difficult

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Speaker 1: to make out a defamation claim and for good reason

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Speaker 1: under the First Amendment. So so so bp I has

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Speaker 1: has a tough go of it here when you look

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Speaker 1: at at the big picture, and so so ABC is

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Speaker 1: gonna start by saying, look, we we we did tell

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Speaker 1: the truth that we we said in bold letters in

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Speaker 1: our story uh safe to eat um and so uh

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Speaker 1: it's not only that we told the truth, but but

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Speaker 1: then b p I has the burden to show that

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Speaker 1: not only did ABC uh tell a falsehood that it

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Speaker 1: but it did so knowing that it was a falsehood.

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Speaker 1: Or at least that it recklessly disregarded the strong probability

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Speaker 1: that that this was was false. And so it's it's

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Speaker 1: very difficult to make out a claim. I think ABC

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Speaker 1: will go after this case on on every every front.

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Speaker 1: Tell us a little a little bit more about the

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Speaker 1: damages that bp I says it suffered as a result

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Speaker 1: of the ABC story. Sure so, so b p I

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Speaker 1: talks about because of these stories, bp I says that

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Speaker 1: it had to shut down three of the four facilities

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Speaker 1: it used to to create this product, this pink slime

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Speaker 1: or lean finally textured beef, and as of a result

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Speaker 1: of that, it had to lay off seven hundred employees

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Speaker 1: and so in in total, it claims that that that

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Speaker 1: equates to one point nine billion dollars and damages. And

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Speaker 1: b p I is not not only seeking that under

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Speaker 1: this South Dakota law, it has the ability to triple

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Speaker 1: that amount. And that's how you get up to five

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Speaker 1: point seven billion dollars if it can show that, uh,

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Speaker 1: that ABC aired these falsehoods with and intent to harm

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Speaker 1: the company. Again, very difficult to make these showings, but

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Speaker 1: that's why there's such big numbers thrown around with this case.

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Speaker 1: Matt is ABC going to attack that local law based

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Speaker 1: on the First Amendment? Yes, and and and I think

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Speaker 1: we're we're already seeing uh First Amendment challenges. We've ABC

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Speaker 1: has already tried to move for for summary judgment earlier

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Speaker 1: in this case. That didn't succeed, but it's also raised

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Speaker 1: the constitutionality of the statute, and the state now has

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Speaker 1: intervened in the case to to defend the constitute constitutionality

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Speaker 1: of the statute. So there is the potential here over

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Speaker 1: the long run, after this jury rules in the next

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Speaker 1: couple of months, for for big appellate fights and in

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Speaker 1: the appeals courts about what what does this law mean

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Speaker 1: and is it really consistent with the First Amendment. So so,

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Speaker 1: now this case is in South Dakota State Court right right,

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Speaker 1: and that's where bp I is based. So is that

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Speaker 1: a as much of a kind of home home court

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Speaker 1: advantage as it as it might seem? Yeah? I think so.

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Speaker 1: I mean, if I were Disney, I would be most

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Speaker 1: concerned about this case right now. In the short term,

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Speaker 1: there's the risk that you you're you're anytime you're appearing

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Speaker 1: before a jury, uh like this, you you don't know

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Speaker 1: how they're going to rule, And there's the potential. I

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Speaker 1: think that in a jury of twelve South Dakota residents,

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Speaker 1: they could be sympathetic two concerns about fake news today,

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Speaker 1: or they may have direct personal experiences with people in

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Speaker 1: the local economy that we're hurt here. So I think

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Speaker 1: there's risk here in the short term for ABC. Over

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Speaker 1: the long term, the legal tests, the First Amendment standards

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Speaker 1: that the Supreme Court has imposed make it make it

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Speaker 1: a tough case for the plaintiffs. Uh, the kind of

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Speaker 1: case that Disney over the long haul is likely to

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Speaker 1: prevail in that I understand that in the opening statements

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Speaker 1: yesterday that ABC's lawyer directly addressed the fact that we're

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Speaker 1: out fighters here. Yeah, and I think that I think

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Speaker 1: they have to do that. Uh. The and they they've

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Speaker 1: tried every everything they could to get this case removed.

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Speaker 1: They why this case is is only being heard now

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Speaker 1: five years later is because Disney. Uh, its first step

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Speaker 1: was to try to take this case into federal courts

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Speaker 1: and and to move away from this. But it so far,

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Speaker 1: at every step of the case, Disney's efforts have been rebuffed.

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Speaker 1: When they tried to take it into federal court, that

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Speaker 1: didn't work. When they tried to move to dismiss the case,

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Speaker 1: the South Dakota Court said no. When they moved for

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Speaker 1: summary judgment, the local court said no. They tried to

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Speaker 1: take it to the South Dakota Supreme Court. That didn't work.

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Speaker 1: So so Disney is throwing everything it can at this

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Speaker 1: but so far, uh, it's found itself before this what

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Speaker 1: could be a difficult local jury and it could have

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Speaker 1: a tough fight over the next couple of months. It's

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Speaker 1: going to be a long trial. Thanks so much. Matthew Shettenhelm,

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Speaker 1: Bloomberg Intelligence litigation analyst,