Disney Seeks Reimbursement of Some of Its $177M "Pink Slime" Payout

ABC's parent company files a lawsuit against AIG Specialty Insurance Company.
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Disney has beef with one of its insurers.

Having paid out $177 million to get out of a defamation lawsuit, Disney is looking for some reimbursement via its insurance policy. But AIG unit Chartis Specialty Insurance Company doesn't believe anything is owed. Disney is now in court in a bid to force arbitration.

The underlying dispute is the defamation case brought by Beef Products Inc. against Disney's ABC concerning the broadcaster's 2012 reporting about beef sold to consumers. A series of reports about BPI's "pink slime" — the derogatory term to describe lean, finely textured beef — put ABC in a trial in South Dakota with billions of dollars on the line. A few weeks into trial this past June, ABC came to a settlement with BPI, which a later securities filing would reveal cost Disney $177 million. Insurers covered more.

But one insurance company didn't agree it had any obligation to fund the settlement. Possibly undercutting any theory that insurers pushed ABC into the settlement, AIG told Disney at the time of the settlement that it wouldn't withhold consent, but also that it didn't believe Disney was indemnified under the policy. Court papers withhold AIG's reasoning. The present lawsuit isn't about that.

Instead, this lawsuit covers a fairly dry topic even by insurance standards. Disney insists it has a right to go to arbitration while AIG believes it satisfied obligations when mediation allegedly commenced. The two sides are fighting over what controls the alternative dispute resolution venue, and Disney is so bothered by AIG's refusal to submit to arbitration that it's now in open court despite repeated warnings to AIG these past few months not to violate confidentiality.

Then again, Disney may have known it was destined to once again touch a courtroom over those "pink slime" reports that were alleged to be untruthful.

A couple weeks before Disney's lawsuit was filed Tuesday, AIG attorney Michael Bowe at the Kasowitz law firm sent his adversary an email stating, "What is regrettable is that you are obviously an untrustworthy liar. Your letter to JAMS completely misrepresents our discussions. I do thank you though for showing your true colors so that I can proceed accordingly for the remainder of these litigations. See you in court as they say."