GREENSBORO, N.C. - A federal jury Friday ruled ABC and members of its news staff committed fraud and trespassing in sending reporters to go undercover as Food Lion employees for a PrimeTime Live expose on unsanitary practices at the supermarket chain.
The jury was told to return on Dec. 30 to decide whether to award Food Lion damages.
It was the second setback for the network in court this week. In Miami on Wednesday, a savings and loan executive who claimed 20/20 portrayed him as a crook won $10 million in a libel suit against ABC.
The Food Lion case had put hidden-camera journalism on trial and was closely watched by companies and news organizations alike for taking up the question of whether journalists can pose as employees of a business to get inside the door.
Legal experts said the case could open a new line of legal attack for companies that get burned by exposes.
In a victory for ABC, U.S. District Carleton Tilley said Food Lion cannot seek damages for lost business attributable to the broadcast. However, Food Lion can seek punitive damages.
Food Lion contended the broadcast cost the supermarket chain $1.7 billion to $2.5 billion in lost sales and stock value. It has not said how much it will seek in punitive damages.
Food Lion, with more than 1,100 stores in 14 states, mostly in the South, had sued over a 1992 hidden-camera report that showed unsanitary conditions at the supermarket, including rat-gnawed cheese and spoiled chicken washed in bleach.
Food Lion denied the allegations and sued - not for libel, but for fraud, alleging the ABC journalists lied to get their jobs and illegally spent company time snooping around instead of performing their Food Lion duties.
The jury said PrimeTime Live producers Lynne Dale and Susan Barnett committed fraud, breach of loyalty and duty and trespass. Also found to have committed fraud were Richard Kaplan, executive producer of PrimeTime Live at the time the story aired, and Ira Rosen, another ABC producer.
ABC was found to have committed fraud through the actions of attorney Jonathan Barzilay. It was Mr. Barzilay who gave the Primetime Live reporting team the legal advice to go ahead with the undercover operations.
In a statement, ABC said: "The truth of the PrimeTime Live report on Food Lion was not questioned in this trial. Instead, Food Lion chose to challenge the way in which PrimeTime Live obtained information about their stories. We never engage in undercover activities lightly, but sometimes they are necessary to bring stories of real importance to the public's attention. Our report on Food Lion was such a story."
"Food Lion is asking the jury to punish the messenger without challenging the message," the network added.
Food Lion attorney Richard Wyatt Jr. said: "Certainly, we would hope the media would be mindful of this decision and accept it as establishing some appropriate guidelines and limitations. I have no idea whether it will actually change investigative reporting."
The jury had to three questions regarding Ms. Dale and Ms. Barnett, specifically whether it was deceptive to submit applications, to work for Food Lion while employed by ABC and to state that they had previous grocery store experience. It answered yes in all three cases.