AIG, the multinational insurance company, says its Chartis Specialty Insurance Co. sold the Disney Co. a policy for journalists at ABC Television that would only pay out if they were sued for malice and had obtained advanced permission about all the legalities involved from outside lawyers before anyone sued.
It probably can be argued that not many journalists would have purchased that kind of a policy and there’s no evidence those at ABC News knew anything about it. But, the details are now at the heart of a legal dispute between Disney and AIG over $25 million that went to settle the Beef Products Inc. defamation lawsuit against the TV network and its reporter Jim Avila.
The disputed insurance coverage was just part of the reported $177 million Disney agreed to pay BPI half-way through a jury trial in Union County, SD, this summer. BPI sued ABC Television, Avila and others regarding a series of reports broadcast in 2012 that repeatedly used the phrase “pink slime” to refer to BPI’s ground meat product sold as “lean finely textured beef” (LFTB).
Disney and the insurance carrier began “non-binding” mediation on the claim for coverage just after ABC and BPI reached their out-of-court settlement. Disney terminated mediation on Sept. 1 and wants to move into arbitration, but without “mutual agreement.”
Ten days ago, Disney went to the U.S. District Court for the Central District of California, seeking to compell the insurance carrier to participate in arbirtation.
In court documents filed in New York, AIG claims the insurance policy held by Disney insured the ABC defendants but excluded coverage for any claims alleging any malicious act, error or omission. The multinational insurance corporation says that for a “defamation carve out” to apply, ABC was required to obtain a “written opinion and authorization from outside legal counsel” stating the contemplated conduct was permissible.
Disney has demanded payment of the full limits of the $25 million policy as partial reimbursement of its settlement with BPI. In suing ABC, the Dakota Dunes, the SD-based company alleged actual malice, which was another requirement of the “carve out” clause.
“In other words, an insured under the policy has potential coverage for claims that defamed a public person so long as it first receives a written opinion from outside counsel opining that the insured’s conduct is appropriate,” says AIG’s complaint.
In the 257-page complaint filed on Sept. 13, AIG says BPI “claimed to be a victim of a journalistic hit job and asserted 26 counts of defamation and disparagement arising out of the ABC defendants’ purported smear campaign against them, each of which alleged that ABC defendants acted with actual malice.”
Attorney Michael J. Bowe with Kasowitz Benson Torres is asking the Supreme Court of the State of New York to end continued arbitration and find the policy does not cover any part of the settlement.
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