North Carolina: $50Mln Judgment Against Hog Farmer is Appealed – DTN

National and state agriculture interest groups asked a federal appeals court to overturn a $50 million nuisance judgement against a hog farm in North Carolina, in a brief filed on Tuesday, saying the punitive damages awarded threaten agriculture.

Ten plaintiffs were awarded a total of $50 million in the case involving Murphy-Brown contract grower Kinlaw Farms in Bladen County, North Carolina. The plaintiffs alleged odor and truck noise generated by the farms should be declared a nuisance, and a jury agreed.

Early in 2018 juries in three separate trials in Raleigh, North Carolina, awarded punitive damages totaling more than $500 million to neighbors near hog farms in the state. The Kinlaw Farms case was part of these trials.

“But we first draw this court’s attention to the enormous harm that would be done by allowing runaway punitive damages awards to rural residents who express surprise that a neighboring farm — which has operated for decades — sometimes causes noise and odors,” said the brief filed in the U.S. Appeals Court for the Fourth Circuit in Richmond, Virginia.

“Imposing quasi-criminal punishment on Murphy-Brown for creating a nuisance when its contract grower has operated its farm in compliance with state regulation is not only extremely unfair, but also highly destructive of our nation’s rural, agriculture-dependent economy.”

The appeal was filed by the American Farm Bureau Federation, National Pork Producers Council, North Carolina Farm Bureau and the North Carolina Pork Council. Back in May 2018, the federal court that resided over the trial reduced the Kinlaw Farms judgement to $3.25 million.

So far, more than 20 lawsuits have been filed by more than 500 plaintiffs who are neighbors of Smithfield Foods hog farms.

The ag groups argue in the court brief that allowing the verdicts to stand would set a precedent for all farmers.

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“Even after reductions to comply with North Carolina limits on punitive damages, repeated verdicts of this measure are crippling; no business could withstand an ongoing assault of this kind,” the ag groups said in the brief. “And small farm operations — which could as easily be targeted using plaintiffs’ legal theories as the processors who contract with them — would be wiped out with a single verdict.

“Importantly, plaintiffs’ legal theories do not target rogue operators who flout environmental laws. They challenge operators who comply with the law and carry out ordinary farming practices. It is no exaggeration to say that a plaintiff win in these lawsuits would subject the everyday activities of all farmers to punitive damages.”

There are about nine million hogs on 2,300 farms in North Carolina. The brief said those farms generate about $11 billion in economic activity and 46,000 full-time jobs.

“This economic activity is focused in the eastern part of the state which, lacking the commercial and industrial base of other parts of North Carolina and with few urban centers, is especially dependent on hog farming,” the groups stated.

“These nuisance suits are fundamentally at odds with the agricultural way of life and the economic and social benefits it brings. The potential practical and economic consequences of successful nuisance suits like the underlying case here are beyond measure. It is with that background in mind that this court should consider whether nuisance suits and punitive damages awards are a permissible method for regulating lawful agricultural practices that are consistent with all prevailing regulations — and thus whether the standards for agricultural practices should be set prospectively by legislators and regulators or retroactively by jurors.”

The groups make the case that liability and damages awarded are not allowed by North Carolina’s right-to-farm law.

In addition, the brief said because Kinlaw Farms has already been subject to “substantial, detailed” state regulation without citation for violations.

“When a farm conducts its operations in compliance with a comprehensive regulatory regime such as North Carolina’s, no punitive damages may be awarded,” the brief said.

The groups also suggest the trial location in Raleigh was a concern to rural residents.

“The defendant requested trial in the Southern Division, where a jury would have been more likely to have experience with the norms of rural life,” the brief said. “The court could perhaps have eased the unfairness of a Raleigh jury deciding a dispute between farm and residential interests by having the jury visit the relevant sites. But it refused to do so.

“The only winners from this litigation are plaintiffs and their entrepreneurial lawyers, who walk away with windfall damages and enormous fees unrelated to any plausible measure of harm. The losers are rural communities that stand to shed dollars, jobs, and economic and social stability, and consumers who lose the benefits of reliable and efficient methods of agricultural production.”

Read the court brief here.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

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