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Disney Takes Insurer AIG to Court Over ‘Pink Slime’ Defamation Settlement

The Walt Disney Company is going to battle with its insurer, AIG, as it seeks coverage for a massive settlement in the “pink slime” defamation case.

In a motion in federal court, Disney seeks to compel AIG to submit to arbitration on the coverage dispute. The underlying litigation is not identified, and all references to it are blacked out. However, the dates line up with Disney’s court battle with Beef Products Inc. in South Dakota.

BPI filed a multi-billion dollar libel suit against Disney, alleging that ABC News had damaged its business with a series of reports on “pink slime.” Disney settled the case partway through trial in June.

In August, Disney disclosed that it had incurred legal costs of $177 million, the bulk of which was believed to be due to the BPI settlement. The total settlement was believed to be significantly larger, once insurance claims were factored in.

The new lawsuit discloses that each of Disney’s insurers consented to the settlement, except for AIG. According to the suit, AIG has denied coverage and also objected to Disney’s choice of venue to mediate the dispute.

Disney is seeking to go before an arbitration panel in Los Angeles, arguing that that’s where the relevant documents and individuals reside, while AIG is looking to move the case to New York.

AIG, formerly known as Chartis, issued a policy to Disney with a liability limit of $25 million, according to documents filed with the motion for arbitration.

The two sides have exchanged increasingly hostile letters in the months since the underlying settlement.

On Oct. 6, Disney’s attorney, Marty Myers of Covington & Burling LLP, wrote to AIG’s lawyers: “It is regrettable that Disney and AIG were not able to come to agreement on further aspects of the arbitration(s),” and warned that litigation would be “frivolous.”

“What is regrettable is that you are obviously an untrustworthy liar,” shot back Michael J. Bowe, AIG’s counsel, of the firm Kasowitz Benson Torres LLP. “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.”

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