Disney Faces Insurance Battle on ‘Pink Slime’ Settlement

This March 29, 2012, file photo, shows the beef product that critics call “pink slime” during a plant tour of Beef Products Inc. in South Sioux City, Neb. (AP Photo/Nati Harnik, File)

MANHATTAN (CN) – An insurance giant filed suit Thursday to deflect coverage of Disney’s massive settlement with a beef company depicted in ABC news broadcasts as serving up “pink slime.”

Represented by Michael Bowe with the firm Kasowitz Benson Torres, insurer AIG notes that the full limit of its $25 million policy with Disney would only offer partial reimbursement of the otherwise undisclosed settlement with Beef Products Inc.

Although the terms of the settlement were confidential, media outlets relied on Disney’s quarterly financial report in saying that its network’s settlement came to at least $177 million.

In South Dakota, where Beef Products filed its 2012 suit, a law prohibiting “agriculture disparagement meant that ABC would be on the hook for treble damages if proven to have defamed a beef additive as “pink slime.”

Beef Products Inc. calls the substance in question “lean, finely textured beef.” It says the ammonia-treated product protects against E. coli with no harmful side effects on consumers.

Blaming ABC’s “pink slime” reports for fueling public backlash, the manufacturer said it had to close three plants in the Midwest and lay off 700 workers. ABC settled with the company four weeks into trial, which had kicked off with plaintiff counsel suggesting that a verdict in their favor could come to $5.7 billion.

Thursday’s insurance dispute in Manhattan Supreme Court meanwhile says that ABC’s settlement did not satisfy policy requirements that “the insured must have obtained a written opinion and authorization from outside legal counsel stating that the contemplated conduct is legal.”

The lawsuit concedes that the “policy has potential coverage for claims that it defamed a public person so long as it first receives a written opinion from outside counsel opining that the insured’s conduct is appropriate.”

AIG’s policy carves certain defamation claims out from a coverage exclusion, but it says “the BPI Litigation claims are not subject to this defamation carve-out.”

“If Defendants believed the terms of the defamation carve-out were commercially unreasonable, the time to raise that concern was at the time defendants were negotiating the policy,” the complaint states.

Representatives from ABC/Disney did not immediately respond to requests for comment.

Thursday’s complaint also names ABC News senior national correspondent Jim Avila as co-defendant.

Avila has been insistent over the years that his “pink slime” reports were not defamatory.

“It’s important to note that we are not retracting anything and we are not apologizing for anything,” Avila said outside the courthouse after the settlement’s announcement in June.

%d bloggers like this: