Parents lose custody of their children for a month after they take innocent bathtime photos in to be developed at Walmart and employee calls police

Lisa and Anthony Demaree took photos of a family holiday to Walmart to be developed in 2008

The couple had their kids taken away for them after concerns were raised about several naked photos of the three young girls



The Demarees had their daughters returned a month later after no evidence of sexual abuse was found

They are suing both Walmart and the city of Peoria, Arizona where they live

They lost the original case in 2009, but their appeal was heard on Wednesday and they are awaiting the verdict



An Arizona couple falsely accused of taking pornographic pictures of their three young daughters are suing Walmart in a bid to win damages after an horrific ordeal which they claim robbed them of precious time with their kids and cost them $75,000 in legal fees.



In 2008, Lisa and Anthony 'A.J.' Demaree took their three young daughters – then aged five, four and 18 months - on a trip to San Diego.



On returning home they took 144 photographs, mostly from their recent trip, to their local Walmart in Peoria, Arizona to have them developed.



Lisa and Anthony Demaree were falsely accused of taking pornographic pictures of their three young daughters

The couple were reported to child protective services after a Walmart employee was concerned that some of the images being developed might be child pornography

What happened next was the start of a nightmare for the Demarees.



A Walmart employee, unhappy over the content of several bath time pictures, contacted bosses with concerns that they may have been images of child pornography.

Instead of receiving a batch of happy memories of a fun family outing, the couple were reported to the police and their children were placed into the care of the Arizona Child Protective Services Agency.



‘It was a nightmare, it was unbelievable. I was in so much disbelief. I started to hyperventilate,’ Lisa Demaree told ABC News at the time.

The Demarees released some of the photos which a Walmart employee though might have been child pornography

It was a month before the girls were returned to their parents, after a Maricopa County Superior Court judge ruled the photographs were in fact harmless and a medical exam revealed no signs of sexual abuse.



The family was reunited but the damage had been done. The couple’s named went on a central registry of sex offenders, while Lisa was suspended from her job at a local school for a year while the investigation was under way.



The couple also had to spent $75,000 on legal bills.



‘We’ve missed a year of our children’s lives as far as memories go,’ Demaree told ABC News.



‘As crazy as it may seem, what you may think are the most beautiful innocent pictures of your children may be seen as something completely different and completely perverted.’

The family is suing both Walmart and the city of Peoria, Arizona where they live

In 2009, the couple sued the city of Peoria and the State Attorney General’s office for defamation. They also sued Walmart for failing to tell them that they had an ‘unsuitable print policy’ and could turn over photos to law enforcement without the customer’s knowledge.



The couple lost the initial hearing after a federal judge sided with Walmart, ruling that employees in Arizona cannot be held liable for reporting suspected child pornography.



However the Demarees appealed to the 9th Circuit Court of Appeals and on March 6 the court held a hearing before three judges.

'The most beautiful innocent pictures of your children may be seen as something completely different and completely perverted,' said Lisa Demaree

The family’s lawyer has argued that Walmart committed fraud by not disclosing to customers that employees would look at their photographs and was also negligent because ‘untrained clerks’ were given the authority to make assumptions about the content of the pictures and report them to police.



Lawyers for Walmart argued that under Arizona statute employees who report child abuse without malice are immune from prosecution and there was no indication of malice in this case.



The Demarees are currently awaiting a verdict from the appeals court on the case against the city and Walmart.

Video: Battle over naked photos of kids

