Two days later, the law firms Weil, Quaranta, P.A. of Miami and Los Angeles, and Babbitt & Johnson, P.A. of West Palm Beach, filed a federal class action suit against Lumber Liquidators alleging the company did just that.
However, the story may backfire because the story has holes in it. This morning, Lumber Liquidators offered free safety tests to customers.
But more importantly, the story raises questions about the ethics of "60 Minutes."
The dirty little secret is much of the spade work by investigative reporters often is done by the staffs of contingency lawyers and other special interest groups, most of them tax-exempt liberal organizations.
Come on, did a producer for the New York-based "60 Minutes" one day walk in a floor store in Texas, sniff formaldehyde, and start snooping around?
After the story initially sent the price of Lumber Liquidators stock down last week, the stock Lazarus-ed this week following a report by Fox Business News that raised questions about the story.
The company said the story was pushed by hedge fund managers who wanted to "short" the stock. The price rose this week.
From Fox Business News:
A growing number of hedge funds and large investors are now questioning the methodology behind the televised “60 Minutes” report which suggested that Lumber Liquidators’ laminated flooring product has high levels of the cancer causing toxin formaldehyde, FOX Business has learned.
The report, broadcast on March 1, had initially pummeled the company’s stock.
But the growing skepticism regarding the investigative report has prompted investors to start snapping up shares of Lumber Liquidators, a shift in the stock’s trajectory that continued Wednesday. Last week, Fox Business was first to report that activist investor Robert Chapman has taken a long position in the stock amid questions about the scientific veracity of the testing.Meanwhile, Reuters reported this morning:
Lumber Liquidators Holdings, facing U.S. government probes over claims of dangerous levels of a cancer-causing substance in its flooring products, defended the safety of its products and gave a blow-by-blow account of its testing process in efforts to assuage investors' concerns.
The hardwood flooring retailer said it would offer free home tests for its customers and promised additional tests if results were above accepted levels. It, however, did not say anything about a possible recall.The company seems sure of its product.
CBS should not be so sure of its product, for the story does raise several ethical questions for "60 Minutes."
1. How did "60 Minutes" learn of this allegation?
2. To what extent were the two law firms involve in the reporting?
3. Were any hedge fund managers aware of the report before it became public knowledge?
"60 Minutes" is a cash cow for CBS -- a mainstay of its Sunday night lineup since the 1970s (it first aired in 1968 on Tuesday nights). It has received numerous awards and numerous critics. The profits generated should be enough to allow the show to hire enough staff to research each story without relying on lawyers and liberal lobbyists do the legwork.
Can we all agree that giving lawyers in a class-action lawsuit a 20-minute infomercial is not journalism?
Like I said, I take no side in the lawsuit. That is why we have courts. When companies screw up, they should pay -- including CBS.
My objection is to the ties of investigative reporting to contingency lawyers and lobbying groups.