Winston-Salem, NC - Food Lion Inc. attorneys asked a federal judge to dismiss a shareholder class-action lawsuit stemming from allegations the company violated labor laws and ran unsanitary stores.
But shareholders said the case should go to trial after they uncovered an internal report documenting out-of- date meat on the shelves at 18 stores. That report was among 60 company documents supporting their claim that Food Lion was aware of unsanitary conditions and labor problems at its stores, shareholder attorneys said.
"This is a case that ought to go to the jury," David Clark, a Greensboro, N.C. lawyer representing one of the shareholders, said during a hearing in a Winston-Salem, N.C. federal court.
The civil, class-action lawsuit was filed by five shareholders after ABC News broadcast a disputed report alleging the company routinely sold spoiled meat and forced employees to work unpaid overtime.
Food Lion stock fell 30% the day after the broadcast, and the company sued ABC over reporting methods used to produce the segment. A North Carolina jury awarded Food Lion $5.5 million in damages in that case, but a trial judge reduced the damage award to $315,000. Both sides have appealed.
"The (shareholder) case still rests where it stood. They still rest their case on 'PrimeTime Live'," Food Lion attorney James Williams said, referring to the ABC news show that aired the disputed report.
Williams said the shareholders have found no evidence Food Lion stores were any less sanitary than competitors'.
"There are health inspections all over the Southeast, and what do they show? They show Food Lion is as good as or better than its competitors," he said.
Williams said the company also complied with securities laws in disclosing events that led up to a $16 million settlement with the U.S. Labor Department over claims that employees were forced to work unpaid overtime.
"There was as widespread a dissemination over the news wires as one could imagine," he said. "It was not buried on the back pages of the (local) papers."
U.S. District Court Judge James Beaty was not expected to rule immediately on the motion to dismiss the shareholder lawsuit.
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