An Update on North Carolina Nuisance Lawsuits

Many are closely monitoring a number of North Carolina nuisance lawsuits filed against Murphy-Brown a division of Smithfield Foods. Since April, juries have rendered three large verdicts against the hog integrator, the most recent verdict issued August 3.

Background

The defendant, Murphy-Brown, is a Delaware company and hog integrator that works with independent farmers and contract growers throughout twelve states. Twenty-six lawsuits were filed against Murphy-Brown beginning in 2014 by nearly 500 plaintiffs who lived near several Murphy-Brown operated hog farms in eastern North Carolina. Because the cases involved a Delaware corporation and North Carolina citizens, plaintiffs chose to file the cases in federal court rather than state court under the legal theory of diversity jurisdiction.

The plaintiffs are neighbors who have been living near the farms for many years. They claim the farms created a nuisance because of “unpleasant odors, swarming insects, and noise from trucks traveling outside their homes, among other things.” Murphy-Brown owns the animals at the farms and has strict protocol for how the animals are to be raised. The plaintiffs did not include farmers as defendants.

Together, the parties chose five cases for which they would conduct preliminary discovery. These “Discovery Pool” cases were chosen to be conducted early to further the litigation process. A Texas attorney is representing the plaintiffs with assistance by a North Carolina firm. The first three cases have been tried and significant jury verdicts have been reached.

McKiver v. Murphy-Brown—Case #1

The plaintiffs in the first case are ten neighbors who brought a nuisance suit against Murphy-Brown for the hogs owned at Kenlaw farms in Bladen County, North Carolina. The facility was a large operation located an hour southeast of Raleigh. The complaint centered on the farmers’ use of lagoons and spray-field technology. The plaintiffs argued that Murphy-Brown refused to implement new manure management practices that would reduce the smell of manure like it had done in Missouri. Murphy-Brown stated that it would cost $1 million per farm to replace this technology and that such an upgrade would put the farmers out of business. Murphy-Brown had no notices of violation and had followed state regulations regarding its manure practices.   

The verdict came back on April 26, 2018, with the jury finding each plaintiff was entitled to $75,000 in compensatory damages and $5 million in punitive damages. This resulted in a total of $50.75 million awarded in damages to the ten plaintiffs. However, North Carolina law caps punitive damages to three times the compensatory damages or $250,000, whichever is greater. Jurors are not informed of this law but instead the judge retroactively reduces the award. Therefore, the damages in case #1 were reduced to $3.25 million from the original $50.75 million.

McGowen v. Murphy-Brown, LLC—Case #2

The second case involved a couple who lived near two separate hog confinement facilities in Duplin County, North Carolina. The barns were permitted by the state to house up to 4,740 hogs--although Murphy-Brown claims that number was never reached. The plaintiffs alleged they have been unable to enjoy their land because of flies the animals attracted, the noise from the trucks coming to and from the facilities, and the smell of the hogs themselves.

The trial was held in Raleigh and on June 29, 2018, the jury returned a verdict against Murphy-Brown, finding the plaintiffs were each entitled to $65,000 in compensatory and $12.5 million in punitive damages. The North Carolina court again applied the damages cap which reduced the total amount awarded from over $25 million to $630,000. In this case, eight of the twelve jurors were from areas with a population over one million. None of the jurors were allowed to visit the farm.

Anderson v. Murphy-Brown, LLC—Case #3

The third case was brought against Murphy-Brown for hogs owned at Crooked Run and Willow Creek Farm in Pender County, North Carolina. Six plaintiffs complained of the nuisance the hog operations brought to the area. The farms are licensed by the state to hold up to 4,200 and 1,446 hogs respectively. In its answer to the complaint, Murphy-Brown claimed the number of hogs never reached this level.

The jury deliberated for several days and on August 3, 2018, awarded a total of $23.5 million in compensatory damages and $450 million in punitive damages. The North Carolina cap reduced the punitive damages to $94 million.  

Twenty-three cases remain on the docket.

Right to Farm Laws

Right to Farm laws have been enacted in all fifty states. These laws were created to give producers a legal defense from nuisance lawsuits brought by plaintiffs who moved to a rural area after the farm had begun operation. State legislatures have enacted Right to Farm laws to protect producers who follow state regulations from nuisance lawsuits. Although North Carolina had a right-to-farm law, the judge ruled that it did not apply to the pending lawsuits because there was not a change in land use.

Senate File 711—North Carolina Farm Act of 2018

In response to the lawsuits, the North Carolina Legislature passed a new, more robust, right to farm law. Senate File 711, also known as the North Carolina Farm Act of 2018, was sponsored by Senator Brent Jackson, a farmer from Autryville, North Carolina. The bill originally passed in the Senate 33-13. It then passed the House 65-42. The Bill was vetoed by Governor Cooper. Cooper stated that his reason for vetoing the bill was that while agriculture rights are vital to North Carolina economy, so are property rights. The very next day, the veto was overridden in the Senate with a 37-9 vote and sent to the House which overturned the Governor’s veto with a vote of 74-45.

The new law prohibits nuisance suits from being filed against a farm unless the claim is brought within a year of the operation’s establishment or a “fundamental” change. While fundamental change is not defined, the law specifically states that new ownership, an interruption of farming for a period no longer than three years, the farm’s participation in a government sponsored program, the use of new technology, or a change in the type of product produced. Additionally, the plaintiff must be the legal possessor of the property affected by the nuisance conditions and the property affected by the alleged nuisance must be within a half of mile of the farm.

The bill would also limit the amount of compensatory damages that a plaintiff property owner would be able to receive when living near a farm. The value of damages would be limited to the value of property that is affected by the nuisance. Additionally, punitive damages could only be awarded if there are previous environmental or criminal violations with the past three years.

Because the bill was enacted after the Murphy-Brown cases commenced, it does not apply to the ongoing cases. If this law had been enacted before the outcome of these cases, the amount of damages would be further limited or the suits may have been barred all together.

What’s Next?

Several days before the latest case was decided, the judge who presided over the first three cases was replaced. Court documents do not explain why Judge Britt was replaced. Judge David Faber of West Virginia will preside over the next two cases. According to a press release by Smithfield, the company plans to appeal these cases to the Fourth Circuit Court of Appeals. The remaining twenty-three cases will be tried throughout the coming months.

Because the results of these lawsuits stemmed from regulations, laws, and practices unique to North Carolina, they are not transferrable to Iowa or other pork-producing states. Even so, the number of cases and the significance of the verdicts make these important cases to follow. We will keep you posted.