JUDGE RULES ABC NEWS VIOLATED LAW

GREG GATTUSO

GREENSBORO, N.C. -- A judge here has ruled that the undercover methods ABC News used to compile a damaging story about allegedly unsanitary practices at a Food Lion store violated North Carolina's Unfair and Deceptive Trade Practices Act.

The Salisbury, N.C.-based chain must decide by July 19 whether to seek damages based on that ruling or on a previous one that found ABC guilty of fraud.

The ruling, handed down last Wednesday by U.S. District Court Judge Carlton Tilley, gives the chain two options:

It can seek treble damages under the UTPA claim, $4,200 (three times the actual damages of $1,400 as determined by a jury); or

It can seek compensatory and punitive damages under its claim of fraud against the network.

A jury awarded Food Lion $1,400 in actual damages plus $5.5 million in punitive damages in January. However, Tilley has not yet ruled on ABC's motion to throw out or reduce that amount.

"The actions which comprise the UTPA violation are also part of the same actions which comprise the jury's finding of fraud," Judge Tilley wrote in his opinion. "[Food Lion] must choose between treble damages under the UTPA, and compensatory and punitive damages under the fraud claim."

Chris Ahearn, a Food Lion spokeswoman, said the company's lawyers had not decided which damages to seek.

An ABC spokeswoman, Terry Everett, said Wednesday's ruling reaffirmed what the judge had said during the trial. The network had no other comment but is considering its next move, she said.

ABC tried to dismiss Food Lion's claim under UTPA, contending that news gathering and journalism are not within the scope of the law's definition of "commerce," but the judge did not agree with ABC's argument.

ABC had also asked the judge to throw out Food Lion's request for $5.5 million in punitive damages, or reduce that amount based on U.S. Supreme Court decisions, but he has yet to rule on those motions.

The undercover investigation aired in a November 1992 broadcast of the news magazine program "Prime Time Live."

SN's parent company, Fairchild Publications Inc. is owned by ABC, which is part of Walt Disney Co.

After the chain elects which damages to seek, the judge will rule on a handful of other motions in the case.