By Karl Plume
(Reuters) - The fate of a $1.2 billion lawsuit accusing ABC News of damaging a beef producer's profits and reputation through its reports about a controversial product dubbed by critics as "pink slime" might be determined this week.
Oral arguments on whether Beef Products Inc of Dakota Dunes, South Dakota, should be able to pursue its case against ABC, a unit of Walt Disney Co, are set for December 17 before Judge Cheryle Gering in a state court in Elk Point, South Dakota.
Once among the top producers of "lean finely textured beef," BPI said ABC News reports beginning in March 2012 cost it $400 million of profit by misleading consumers into believing the product is unsafe.
BPI closed three of its four plants last year, laid off 650 employees, and saw annual revenue plunge roughly 80 percent to $130 million from more than $650 million.
Other defendants include star ABC News anchor Diane Sawyer, two reporters who covered the story in March and April 2012, and two former U.S. Department of Agriculture employees and a former BPI employee who were interviewed and quoted in ABC's coverage.
Actual damages could be tripled if ABC News were found liable under South Dakota's Agricultural Food Products Disparagement Act. BPI is also seeking punitive damages.
The case, which has been closely watched among both the agriculture and media communities, could put modern television journalism on trial and highlight the power of language in the Internet Age. In the wake of the reports on "World News with Diane Sawyer," the term "pink slime" went viral.
The case also underscores an intensifying war between the farm sector and its critics over how food is made. That tension has been keenly felt by the nation's cattle and hog producers, who are just returning to profitability after years of high-priced feed and lower prices for their animals. Now, beef and pork retail prices in the United States have soared to record highs over the past two months, and demand for both remain seasonally strong.
The battle comes after Cargill Inc, one of the world's largest beef processors, said on November 5 that it will indicate on its packaging labels when finely textured beef is being used in its U.S. ground beef products.
"We look forward to presenting our case," Craig Letch, BPI's director of food safety and food quality, said in a statement.
ABC News spokesman Jeffrey Schneider declined to comment, but attorneys for the news division have said the case is without merit. In court papers, ABC News has argued the lawsuit was a bid to chill media coverage of the food industry.
William Marler, a lawyer representing the former USDA employees, could not be reached for comment.
BPI says its "lean finely textured beef," a low-fat product made from beef chunks and trimmings and exposed to bursts of ammonium hydroxide to kill E. Coli and other dangerous contaminants, was mischaracterized as pink slime 137 times over four weeks in the ABC News reports and social media postings.
The term is believed to have been coined by a USDA scientist in a 2002 email after a tour of a BPI plant, according to court documents, documents obtained by Reuters and a New York Times story from 2009.
The case is Beef Products Inc et al v. American Broadcasting Cos et al, Circuit Court of South Dakota, Union County, No. 12-292.
(Reporting by Karl Plume in Chicago. Editing by Andre Grenon)