Food Lion, Inc. v. Capital Cities/ABC, Inc., 6:92CV592.

Citation887 F. Supp. 811
Decision Date21 March 1995
Docket NumberNo. 6:92CV592.,6:92CV592.
CourtUnited States District Courts. 4th Circuit. Middle District of North Carolina
PartiesFOOD LION, INC., Plaintiff, v. CAPITAL CITIES/ABC, INC., ABC Holding Co., American Broadcasting Companies, Inc., Lynne Litt, Richard N. Kaplan, Ira Rosen and Susan Barnett, Defendants.

Andrew Copenhaver, Winston-Salem, NC, John J. Walsh, New York City, for plaintiff.

Harrell Hugh Stevens, Jr., Jerry S. Alvis, Raleigh, NC, Randall J. Turk, Washington, DC, for defendants.

MEMORANDUM OPINION

TILLEY, District Judge.

Plaintiff Food Lion has brought this action against Defendant Capital Cities/ABC, Inc. ("ABC") for injuries suffered as a result of ABC's undercover investigation of Food Lion's operational practices and subsequent broadcast on Prime Time Live, an ABC television production. Specifically, Food Lion alleges (1) state tort law violations of intentional misrepresentation, deceit, fraud, negligent supervision, trespass, breach of fiduciary duty, and respondeat superior; (2) civil conspiracy; (3) violations of federal wiretapping laws; (4) unfair and deceptive trade practices in violation of North Carolina General Statute § 75-1.1; and (5) violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq.. ABC moved to dismiss all claims, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Additionally, defendant Barnett moved to dismiss all claims against her based on an asserted lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Magistrate Judge Sharp's Recommendation determined that ABC's motion to dismiss should be denied as to Claims One, Three, and Fourteen of the Amended Complaint (Food Lion's state law claims of fraud, trespass, and civil conspiracy) and should be granted as to Claims Six and Seven (Food Lion's wiretapping claims) and Claims Nine through Thirteen (Food Lion's civil RICO claims). As to Claims Two, Four, Five, and Eight (Food Lion's claims of negligent supervision, respondeat superior, breach of fiduciary duty, and unfair and deceptive trade practices), the Magistrate Judge recommended that ABC's motion to dismiss be deferred under Rule 12(d) until trial or summary judgment adjudication. Additionally, it was recommended that Defendant Barnett's motion to dismiss for lack of personal jurisdiction be denied. Both Food Lion and ABC have sought reconsideration by this Court, pursuant to Rule 72(b).

Upon review of the Magistrate Judge's Recommendation, the parties' objections and responses, and after a de novo review of the issues presented, this Court adopts the results recommended as to each of the claims and adopts the reasoning as to Counts One through Eight and Fourteen as well as the result and reasoning as to Defendant Barnett's Rule 12(b)(2) motion. Counts Nine through Thirteen, the civil Rico claims, will be dismissed pursuant to the following discussion.

I.

Defendants seek an order dismissing all claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The 12(b)(6) motion tests only the legal sufficiency of the complaint and does not speak to the plaintiff's ability to prove the facts alleged. In ruling on Defendants' 12(b)(6) motion to dismiss Food Lion's amended complaint, the Court should accept as true all well-pleaded allegations, and, viewing the complaint in a light most favorable to the plaintiff, should not dismiss the case unless it appears certain that the plaintiff can prove no set of facts which would entitle it to relief. Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 1307, 127 L.Ed.2d 658 (1994).

Plaintiff's complaint in this case is forty-seven pages long. The facts alleged in the complaint and stated in the light most favorable to Food Lion, the non-moving party, depict the following: Food Lion, Inc. ("Food Lion") is a corporation organized under the laws of the State of North Carolina and has its principal office and place of business in Salisbury, North Carolina. Food Lion is an operator of retail food supermarkets throughout the southeastern United States.

Prime Time Live ("PTL") is an ABC network news show. The show airs in prime viewing time in order to capture the largest possible audience. PTL is not a "straight news" program; instead, PTL presents "undercover," "investigative" and "inside" stories of a sensational nature designed to attract large audiences and Nielsen ratings, with the commensurate financial rewards and status within the television industry. PTL first aired in August of 1989. The subject matter and content of PTL broadcasts are subject to the control and supervision of Capital Cities/ABC, Inc., ABC Holding Co., and American Broadcasting Companies Inc. Richard Kaplan was the executive producer of PTL during all relevant time periods. Ira Rosen was the senior producer of PTL during all relevant time periods. Susan Barnett was an associate producer and Lynne Litt was an employee of PTL.

PTL seeks one "amazing" piece per week. Undercover investigations are one important means by which PTL obtains such "amazing" stories as necessary to meet its goal of attracting large prime time audiences. PTL has undertaken as many as thirty-six undercover operations (to the date of the amended complaint) involving the use of hidden cameras. The use of hidden cameras requires the use of falsehoods, misrepresentations and deceit in order to position recording equipment and to entice persons into actions or statements which can be recorded. ABC also produces other programs in which it has aired stories based on undercover operations involving the use of hidden cameras. ABC regularly conducts undercover operations and has procedures and policies to facilitate these efforts. ABC's News Policy Manual provides that "in the course of investigative work, reporters should not disguise their identity or pose as someone with another occupation without prior approval of ABC News Management." The ABC News Policy Manual states that "news gathering of whatever sort does not include any license to violate the law."

In December of 1991, Lynne Litt received a suggestion from persons working on behalf of the United Food & Commercial Workers International Union ("UFCW") that Food Lion might present a subject for investigation. At about the same time, ABC associate producer Susan Barnett received information from a group called the Government Accountability Project ("GAP") suggesting that Food Lion would be a good target for investigation. GAP was closely aligned with the UFCW and the information that GAP gave to Barnett came from UFCW. The UFCW has been trying unsuccessfully to organize Food Lion employees for more than a decade. The UFCW has publicly acknowledged that it has been conducting an intense "corporate campaign" with the stated goal of unionizing Food Lion or putting it out of business. The UFCW has instigated administrative or legislative investigations by various governmental authorities by alleging violations of law or regulations on the part of Food Lion. In addition, it has financially supported litigation against Food Lion, and has courted and utilized the media to get widespread publicity for its charges.

In early 1992, Litt and Barnett submitted, independently, proposals for a PTL story on Food Lion. These proposals were approved by ABC management, and it was determined that undercover or hidden camera work would be necessary to develop the story. Litt and Barnett were told to begin work and to report to Ira Rosen. Rosen emphasized to Litt and Barnett that every step of the undercover work would need to be approved by upper management of ABC.

Litt decided that the best way to obtain the sensational footage they were seeking was for her, Barnett, and others to obtain employment with Food Lion. They would then arrange for tiny video cameras and audio equipment to be secreted on their persons, which they would then use to record the actions and statements of other Food Lion employees. Litt and Barnett were aware that if they used their true identities Food Lion would not hire them.

Litt, Barnett, and others utilized means including the mails and interstate wire facilities to create false identities and backgrounds, complete with supporting documentation. Litt turned to the UFCW, which Litt knew or should have known was engaging in a public campaign against Food Lion, to help her provide references for the background checks that Food Lion would conduct in reviewing applications for employment.

In March 1992, Litt wanted to review a Food Lion employment application prior to the attempt to gain employment for herself and others. Litt, operating from Atlanta, called Nicholas Clark, a Washington, D.C. based in-house lawyer for UFCW. Clark supplied Litt with the name of a former Food Lion employee. The former employee provided Litt with Food Lion employment applications. Litt telecopied copies of the application to New York, so that Barnett could practice filling out the application. Litt also sought Food Lion applications through Neel Lattimore, who did public relations work for UFCW. Litt received additional applications by telecopy in Atlanta from Lattimore in New York.

Later in March 1992, Litt had further conversations with Clark. Litt told Clark that she was an undercover operative for ABC and that her identity and the nature of the story needed to remain secret. Clark suggested that Litt seek employment with Food Lion as a deli clerk, and he or Harry Carter (a colleague of Clark's) arranged for her to view deli workers in a unionized supermarket on a "no questions asked basis."

In another telephone conversation in March 1992, Litt asked Clark to find a supermarket in Pennsylvania that Litt could use as an employment reference. Litt explained to Clark that she needed a store in Pennsylvania to fit the background that she had created for...

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