AIG sues Disney to avoid paying 'pink slime' settlement costs

By Jonathan Stempel

NEW YORK (Reuters) - American International Group Inc on Thursday sued Walt Disney Co to avoid having to reimburse the parent of ABC News for part of a settlement of a meat producer's defamation lawsuit over a product that critics call "pink slime."

In a complaint filed in a New York state court in Manhattan, AIG Specialty Insurance Co urged a judge to reject Disney's $25 million reimbursement demand, related to its larger June 28 settlement with Beef Products Inc (BPI), under an insurance policy that excluded coverage for claims alleging malice.

Thursday's lawsuit stemmed from BPI's lawsuit against ABC and reporter Jim Avila over reports in March and April 2012. According to the privately held South Dakota company, these reports falsely implied that BPI's "lean, finely textured beef" was not safe, nutritious or even meat.

 

AIG said in its lawsuit that Disney's policy covered some defamation claims, but only if the company had first found an outside lawyer to say the statements it planned to broadcast were acceptable.

The New York-based insurer accused Disney of trying to "create coverage where none exists."

AIG filed its lawsuit nine days after Burbank, California-based Disney sued the insurer in Los Angeles federal court, seeking to send the dispute into arbitration.

Lawyers for Disney in the Los Angeles case did not immediately respond on Thursday to requests for comment.

ABC and BPI did not disclose terms of their settlement, which ended a jury trial.

But in an Aug. 8 regulatory filing, Disney said it had incurred $177 million of costs, in addition to what insurance covered, to settle litigation during the second quarter. [nL1N1JP10Y] [nL1N1KV07P]

Several media reports have said the BPI settlement was for a larger amount.

BPI had said ABC's reports forced it to close plants and lay off several hundred workers. It had sought $1.9 billion of damages, which could have been tripled to $5.7 billion under a South Dakota "food products disparagement" law.

The New York case is AIG Specialty Insurance Co v American Broadcasting Companies Inc et al, New York State Supreme Court, New York County, No. 656581/2017. The Los Angeles case is Walt Disney Co v. AIG Specialty Insurance Co, U.S. District Court, Central District of California, No. 17-07598.

(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)