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Jury Awards Food Lion More Than $5.5 Million in Punitive Damages Against Capital Cities/ABC, Inc. and 'PrimeTime Live' Producers

GREENSBORO, N.C., Jan. 22 /PRNewswire/ -- A federal court jury today awarded Food Lion, Inc. $5,545,750 in punitive damages against Capital Cities/ABC, Inc., the American Broadcasting Cos., Inc. and two producers of the network's "PrimeTime Live" program.

The 12-member jury returned its decision after more than five days of deliberation in the sixth week of the trial. In earlier phases of the trial, the jury found the companies and four producers had committed fraud, and awarded Food Lion compensatory damages.

"We are very pleased with the jury's award," said Tom Smith, president and chief executive officer of Food Lion. "However, this case was not just about money, it was about right and wrong, and the jury's first verdict was just as important to us as this decision is. We believe this jury has said that ABC must be held accountable when it breaks laws that everyone else is expected to obey."

"Although this trial was about `PrimeTime Live's' illegal conduct, Food Lion has maintained, from the beginning, that the broadcast was not accurate, nor did it reflect tile conditions in Food Lion stores -- now or then," Mr. Smith added.

Mr. Smith said he thanked the jurors for their service and the sacrifices they have made during the trial, which began December 9, 1996. He added his appreciation to the thousands upon thousands of Food Lion customers and employees who have remained loyal to the company. "It is gratifying to us that so many stuck by us even without the benefit of the weeks of testimony that led this jury to its conclusions."

In making its award, the jury imposed damages of $4 million against Capital Cities/ABC; $1.5 million against American Broadcasting Cos., Inc.; $35,000 against defendant Richard Kaplan, executive producer of "PrimeTime Live;" and $10,750 against defendant Ira Rosen, senior producer of the news magazine program. The jury did not impose any punitive damages against the two other named defendants, producers Lynne Dale and Susan Barnett.

Food Lion attorney Richard L. Wyatt, Jr. said Food Lion will review an earlier ruling by District Court Judge N. Carlton Tilley, Jr., who presided over the trial, that limited the scope of evidence Food Lion could present and kept the jury from considering large compensatory damages -- those Food Lion contends stem from PrimeTime Live's use of the illegally obtained tapes.

Mr. Wyatt said: "We hope this jury award today will be an effective reminder to ABC that it needs to follow the laws of this country, and a warning to other news organizations that illegal conduct in the pursuit of sensational videotape will not be tolerated.

"We think this will help the thousands of honest, hard-working journalists out there who pursue important stories every day without resorting to fraud and other illegal acts," Mr. Wyatt continued. "We need a free press in this country -- and the public needs to be able to trust that the press it relies on for information isn't engaging in illegal activities to create stories." On December 20, 1996, the Greensboro jury found the network, its parent companies and all four producers had committed fraud. It had returned additional verdicts of trespassing and breach of duty of loyalty against Ms. Dale and Ms. Barnett, who shot hidden camera footage in Food Lion stores in 1992. On December 30, the jury awarded Food Lion $1,402 in compensatory damages.

Food Lion, Inc. brought its suit against Capital Cities/ABC, Inc. in September, 1992. On November 5, 1992, "PrimeTime Live" broadcast its story on Food Lion. That story relied heavily on hidden-camera videotape obtained by Ms. Dale and Ms. Barnett, through methods that the Greensboro jury determined to be fraud, trespass and breach of the duty of loyalty. Food Lion has contended that by not fulfilling their duties of loyalty to Food Lion and, instead, working in the interests of ABC, the producers were not "reporting the news" but in fact creating and attempting to stage events.

The news magazine segment also relied on interviews with former Food Lion employees who claimed to have witnessed unsanitary food-handling practices at Food Lion stores.

"However, none of the videotape shot by `Prime Time Live' producers -- and that includes all of the videotape, not just what aired on the program -- supported these claims," said Chris Ahearn, Food Lion's Manager of Corporate Communications.

"Food Lion has always contested the accuracy of the show," Ms. Ahearn continued. "We were not able to raise some of these points during this trial, but we believe this jury's award will encourage other members of the media to take a closer look not just at ABC's tactics, but also at the true extent of the program's misrepresentations."

The compensatory damages awarded to Food Lion were for the costs sustained by the company in hiring and training Ms. Dale and Ms. Barnett, who, after using falsified job applications, work histories and references to gain employment with Food Lion, wore wigs and bulky clothing to disguise the hidden-camera equipment they used to film inside three Food Lion stores.

Ms. Barnett was employed to work in the bakery-deli department of a Food Lion store in Myrtle Beach, S.C., and she shot hidden-camera videotape during six of the seven days she was there. Ms. Dale wore her hidden camera equipment at two Food Lion stores in the Hickory, N.C. area, where she was on Food Lion's payroll for eight days.

During the trial, ABC's attorneys and producers of the "PrimeTime Live" program admitted that Ms. Dale, Ms. Barnett, Mr. Rosen and Mr. Kaplan developed the plan to submit false job applications to Food Lion so the program could videotape with hidden cameras.

The plan was approved by Capital Cities/ABC attorneys and its standards and practices department. In surprise testimony in the final week of the punitive damages phase, "PrimeTime Live" co-anchor Diane Sawyer said that she had also "assented to and approved of" the plan to submit these false applications. ABC claimed that deception and misrepresentation are integral parts of journalism's long and honorable tradition.

However, portions of the videotape shown during the trial revealed that the two women, while purportedly working for Food Lion, were actually attempting to capture sensational footage for the news magazine show.

"Their own tapes showed them scouting locations for other hidden cameras, attempting to violate Food Lion's food-handling policies and expressing frustration -- to the point of swearing -- when attempts at sensational footage were foiled by conscientious Food Lion employees," Ms. Ahearn said.

After the jury was discharged, Judge Tilley, of the Middle District for the U.S. District Court of North Carolina, asked Food Lion attorneys to deliver briefs within 10 days on its claim that Capital Cities/ABC, the network and the producers committed unfair and deceptive trade practices. The jury earlier answered interrogatories from the judge on that issue, recommending a $1,500 damage award against the media company. Attorneys for Capital Cities/ABC were given until February 21, 1997 to file any motions and briefs and attorneys for Food Lion were given until March 17, 1997 to file answers to those.

Food Lion was represented by the law firms of Akin, Gump, Strauss, Hauer & Feld, of Washington, D.C., and Womble, Carlyle, Sandridge & Rice, of Winston- Salem, N.C. Lead attorneys for the grocery company were Richard L. Wyatt, Jr. and Michael J. Mueller of Akin, Gump and W. Andrew Copenhaver and Tim Barber of Womble, Carlyle.

Food Lion, Inc. is based in Salisbury, N.C. and operates more than 1,100 stores in 14 states. It has more than 72,000 employees and is the largest private employer in North Carolina.

SOURCE Food Lion, Inc.
 -0- 01/22/97

/CONTACT: Chris Ahearn of Food Lion, 704-633-8250; or Donna K.H. Walters or Anne George of Sitrick and Company, 910-379-7749 or 910-379-1552/


CO: Food Lion, Inc. ST: North Carolina IN: FOD REA SU:

KS-BG -- LAW076 -- 0865 01/22/97 15:18 EST
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Date:Jan 22, 1997
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