Walt Disney Co. and American International Group Inc. are embroiled in a legal battle over a $25 million reimbursement claim connected to the settlement of a meat company’s defamation lawsuit against Disney subsidiary ABC News.
The Burbank entertainment and media giant filed its lawsuit against AIG Specialty Insurance Co. in U.S. District Court in Los Angeles on Oct. 13 to take the matter to arbitration. The New York insurer responded with its own complaint against Disney on Oct. 26 in New York State Supreme Court.
The lawsuits stem from a 2012 report on ABC News in which Beef Products Inc. was accused of producing “lean, finely textured beef” that was not safe, nutritious or even meat. Critics of the South Dakota company, which served fast food restaurants and school meal programs, referred to the beef as “pink slime.” ABC and Beef Products ended a jury trial in June with a settlement for an undisclosed amount although media reports said Disney’s share was about $177 million.
Disney is demanding that AIG pay $25 million to reimburse what it has paid out in the settlement. AIG alleges Disney of trying to “create coverage where none exists,” according to a story from Reuters.
A spokesperson for Disney issued this statement on Friday: "Rather than honor the terms of the insurance policy it sold us, AIG has chosen instead to evade those terms and attack its customer. We will vigorously pursue our right to recover."
The lawsuit by AIG was first reported on Thursday. Shares of Disney (DIS) closed Friday down 25 cents, or a fraction of a percent, to $98.31 on the New York Stock Exchange.