ELK POINT, S.D. | Allowing Beef Products Inc.'s $1.2 billion defamation suit against ABC News to proceed would have a chilling effect on free speech rights, a South Dakota judge heard Tuesday.

"More is at stake here than the mere expense of litigation," ABC attorney Kevin Baine told Union County Circuit Court Judge Cheryle Gering. "What is at stake is the freedom of a news organization and individual citizens to report on matters of public interest without the fear of being subjected to the uncertainty, burden and risk of litigaton."

BPI attorney Erik Connolly countered that ABC cannot hide behind the First Amendment because the network, in a series of reports in March 2012, knowingly disparaged the Dakota Dunes-based firm's trademark beef trimmings, which critics repeatedly referred to as "pink slime."

"They knew their statements were factually inaccurate," Connolly told the judge. "The objective was to damage BPI's reputation and destroy its relationship with its customers. And they succeeded."

The dueling arguments came during a nearly four-hour hearing that will help Gering determine whether she should throw out all or part of the closely watched case, or progress to the evidence-gathering phase. 

At the conclusion of the hearing, Gering pledged to issue written rulings "as soon as possible" on four separate motions to dismiss, but did not give a timetable.

BPI, which was the world's largest producer of lean boneless beef at its height, claims ABC engaged in a "prolonged disinformation campaign" that led the public to lose confidence in its Lean Finely Textured Beef, drying up 80 percent of its business. As a result, the second-generation, privately held business was forced to close three of its four plants and cut more than 700 jobs.

BPI co-founders Regina and Eldon Roth and their daughter, Jennifer Letch, watched the proceedings Tuesday in the front row of the Union County courtroom. The 70-seat room was about three-quarters full, with most of the audience comprised of large teams of lawyers and reporters.

None of the individual defendants attended the hearing. They include ABC news anchor Diane Sawyer and two correspondents who worked on the reports, Jim Avila and David Kerley. Also named as defendants were three industry officials interviewed for the stories, including former BPI employee Kit Foshee, and two former U.S. Department of Agriculture officials Carl Custer and Gerald Zirnstein.

Zirnstein is credited with coining the term "pink slime," which spread like wildfire in social media circles in March 2012.

Connolly, a Chicago-based attorney, said the derogatory phrase was used 132 times on ABC reports.

"This was not an off-the-cuff remark or a one-time incident," he told the judge.

While the phrase may be as unflattering and even critical description of the product, it is not an "overly objective false statement," Baine argued. "It's pink and it's slimy," he said.

Baine, a Washington, D.C.-based attorney who specializes in First Amendment cases, pointed out ABC in every single broadcast made it clear that government regulators had determined LFTB was safe to consume.

"ABC never hinted it was unsafe. They never quoted critics that it was unsafe," he said.

But Connolly countered that ABC reports were accompanied by negative information that was untrue, such as LFTB was once dog food, was from the "contaminated part of a cow,"  and was sprayed with a disinfectant.

BPI's product, low-fat trimmings left over after slaughter plants cut carcasses into steaks, roasts or other cuts, were used in as much as 70 percent of the nation's ground beef at its peak. BPI's patented process separates the bits of lean meat from the fat with a centrifuge, and treats it with a puff of ammonia hydroxide gas to kill E. coli and other potentially deadly pathogens, before going through a quick freeze process.

During Tuesday's hearing, Gering also heard oral arguments in a separate ABC motion to dismiss two BPI-related companies, BPI Technology and Freezing Machines, from the case.

The network argues the two entities are not real parties in interest, and therefore have no right to assert the claims. BPI counters that all three companies are involved in producing and selling LFTB.

South Dakota is one of 13 states with food disparagement laws, which, if BPI prevails in its case, would allow the state court to triple the damages the company is seeking, from $400 million in lost profits to more than $1.2 billion.

The opposing attorneys spent a great deal of time arguing over the intent of the 1994 statute.

Ed Evans, an attorney for Custer and Zirnstein, asked the judge to dismiss the two former USDA officials as defendants, saying since neither are South Dakota residents, they do not fall under the court's jurisdiction.

Gering also heard arguments on a separate motion from Foshee attorney Stephen Sanford to dismiss the case.

Online

Visit siouxcityjournal.com for a courtroom audio recording of Tuesday's testimony and to read court documents in the Beef Products Inc. defamation case.