Food Lion, Inc. v. Capital Cities/Abc, Inc.

194 F.3d 505 (4th Cir. 1999)

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Nature of the Case

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Facts

D's PrimeTime Live program received a report alleging that P stores were engaging in unsanitary meat-handling practices. The allegations were that P employees ground out-of-date beef together with new beef, bleached rank meat to remove its odor, and re-dated (and offered for sale) products not sold before their printed expiration date. D decided to conduct an undercover investigation. Reporters Lynne Dale and Susan Barnett concluded that they would have a better chance of investigating the allegations if they could become P employees. With the approval of their superiors, they proceeded to apply for jobs submitting applications with false identities and references and fictitious local addresses. The applications failed to mention the reporters' concurrent employment with D and otherwise misrepresented their educational and employment experiences. They were hired. Barnett worked for two weeks, and Dale for one week. They used tiny cameras and microphones concealed on their bodies to secretly record P employees treating, wrapping and labeling meat, cleaning machinery, and discussing the practices of the meat department. They recorded 45 hours of concealed camera footage. Some of the footage was used on a November 5, 1992 broadcast of PrimeTime Live. The program included statements by former P employees alleging even more serious mishandling of meat. P sued Ds for the methods D used to obtain the video footage. P claimed fraud, breach of the duty of loyalty, trespass, and unfair trade practices, and seeking millions in compensatory damages. A jury found all of the Ds liable to P for fraud and two of them, Dale and Barnett, additionally liable for breach of the duty of loyalty and trespass. The district court determined that Ds had violated the North Carolina Unfair and Deceptive Trade Practices Act (UTPA). The court ruled that P's claim for lost profits, lost sales, diminished stock value or anything of that nature could not be recovered because these damages were not proximately caused by the acts (fraud, trespass, etc.) attributed to Ds. The jury awarded P $1,400 in compensatory damages on its fraud claim, $1.00 each on its duty of loyalty and trespass claims, and $1,500 on its UTPA claim of which P elected the fraud damages. The jury then awarded $5,545,750 in punitive damages on the fraud claim but refused to award punitive damages against the reporters, Dale and Barnett. The district court ruled that the punitive damages award was excessive, and P accepted a remittitur to a total of $ 315,000. Ds moved for judgment as a matter of law on all claims. The motion was denied. Ds appealed. P appealed the ruling that the damages P sought as a result of the PrimeTime Live broadcast were not recoverable in this action.