ABC loses bid for appeal of verdict in recycling machine story

IOWA–In late April, the U.S. Supreme Court declined to hear an appeal of a $1 million libel award against ABC.

ABC argued that the decision of the U.S. Court of Appeals in St. Louis (8th Cir.) should be overturned due to application of the incorrect legal standard which resulted in a verdict against ABC. ABC had contended that the party the story focused on, Lundell Manufacturing Co., was a public figure drawn into a public conflict, but the court instead ruled that the corporation was a private figure plaintiff who did not voluntarily choose to become involved in the controversy.

The early July 1992 story on ABC’s “World News Tonight with Peter Jennings” reported that the manufacturing company based in Cherokee, Iowa, had produced a machine designed to recycle garbage, but instead, produced more.

The story, part of ABC’s “Anger in America” reports, highlighted Americans who were upset with how their tax money was being spent. The segment focused on a recycling machine in Berrien County, Georgia which was bought with revenue bonds. The ABC report included interviews with county taxpayers who claimed that the machine made more garbage than it disposed of since it produced fuel pellets and compost, which the county had a hard time selling. The segment concluded that the machine “does not work.”

Lundell sued ABC in the federal District Court in Sioux City in early August 1992 arguing that the report falsely charged that its machine was not productive, that there were no buyers for the fuel pellets, and that the county residents were forced to transfer their trash to another landfill due to overcrowding. ABC insisted its conclusion was valid and based on the fact that the machine did not do what it set out to accomplish, which was to reduce the quantity of the county’s garbage.

The jury found the ABC story libelous and awarded $900,000 in damages for injury to Lundell’s reputation and $158,000 in damages for lost profits. However, the trial judge set aside the damage awards, finding that the ABC report was “substantially true.”

In early April 1996, Lundell appealed. The court reversed the trial judge’s decision to set aside the award, ruling that the statement, “[T]his garbage recycling machine . . . does not work” could be understood to allege that the machine was inoperable. (Lundell Manufacturing Company v. American Broadcasting Companies, Inc.; Media Counsel: Floyd Abrams, New York)