Court slashes "excessive" Food Lion punitive damages award

NORTH CAROLINA–A federal court in Greensboro in late August reduced the punitive damages awarded to the Food Lion supermarket chain in its suit against Capital Cities/ABC and two ABC employees. In response to a post-trial motion filed by the defendants, Judge N. Carlton Tilley reduced the jury’s punitive damages awards by more than $5.2 million overall, from more than $5.5 million to $315,000.

In December 1996, a federal jury found that the defendants had committed fraud and trespass to gain access to the plaintiff’s stores in the course of the network’s undercover investigation of Food Lion’s food-handling practices for a report on “PrimeTime Live.” In late January 1997, the same jury awarded the chain $5.5 million in punitive damages to be assessed against the network and two “PrimeTime Live” producers.

In response to the jury verdict, the defendants asked the court to set aside most of the damage awards based on the theory that, absent a showing that the media had acted with actual malice by reporting a known falsehood or showing reckless disregard for the truth, punitive damages could not be awarded.

The court did not agree. Without directly addressing the issue of the truthfulness of the story, Judge Tilley found that the “consciousness of wrongdoing” involved in committing fraud and trespass were the equivalent of the actual malice standard required in libel cases. Thus the jury was permitted to impose punitive damages.

But while the First Amendment failed to bar such damages altogether, the Constitution’s due process requirements would not permit the imposition of excessive damages. In this case, Tilley found, the jury had gone too far. Because the ratio of punitive to actual damage was so great — punitive damages against Capital Cities were 2,857 times greater than the $1,402 actual damage award — the jury’s verdict was too disproportionate to be constitutionally sustainable. The court also considered factors such as the degree of involvement of the network officials in the actual production of the report and the fact that the producers had sought advice from an attorney who assured them that their undercover techniques were not illegal.

The plaintiff has until September 19 to decide whether to accept the court’s decision or opt for a new trial on the issue of punitive damages. (Food Lion, Inc. v. Capital Cities/ABC, Inc.; Media Attorney: Randall Turk, Raleigh, N.C.)