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On April 26, 2018, a jury in a federal court in North Carolina reached a decision in McKiver, et. al v. Murphy-Brown, LLC, No. 7:14-CV-180-BR (“Murphy-Brown”) resulting in a $50.75 million judgment against Murphy-Brown, LLC, a subsidiary of Smithfield Foods, Inc. Given the size of the judgment and the fact that Smithfield Foods, Inc. is the world’s largest pork processor and hog producer, the decision received widespread publicity. Here are five takeaways from this newsworthy legal decision.
The Case Was Brought Against the Integrator, Not the Farmer
The plaintiffs in Murphy-Brown were 10 neighbors of the Kinlaw Farm in Bladen County, North Carolina, whose owner contracts with an integrator, Murphy-Brown, LLC, to raise hogs. Although the plaintiffs filed, and subsequently dismissed, a previous lawsuit against the owner of Kinlaw Farm, the case at issue was brought directly against the hog integrator. The case was heard in federal court because Murphy-Brown, LLC is a Delaware corporation, and when parties are from different states and the amount in controversy is $75,000 or more, the case may be heard in federal court, based on the legal principle of diversity jurisdiction.
The plaintiffs claimed the waste management systems at the farm, consisting of storing the hog excrement in open-air lagoons and later spraying the waste on nearby fields, was a nuisance that negatively impacted their health and quality of life. The plaintiffs further argued Murphy-Brown, LLC had the resources to implement a better waste management system at Kinlaw Farm that could have reduced odors and impacts to the neighbors. Based on the evidence presented at trial, the jury found the integrator was liable for causing a nuisance, defined as a substantial and unreasonable interference with the plaintiffs’ use and enjoyment of their properties.
The Case is Just the Beginning of Nuisance Lawsuits against Murphy-Brown, LLC
Another reason many consider the Murphy-Brown decision significant is because it was the first decision in a group of 26 nuisance cases, filed by more than 500 plaintiffs living near farms who contract with Murphy-Brown, LLC to raise hogs. Only time will tell if the Murphy-Brown decision and those to follow will change the way hog integrators and farmers manage waste. The second hog nuisance trial is scheduled to begin with jury selection on Tuesday, May 29, in US District Court in Raleigh, North Carolina.
The Jurors Did Not Get to Smell for Themselves
One of the many motions in Murphy-Brown was a request for the jurors to visit Kinlaw Farm and smell for themselves whether the hog waste constituted a nuisance to neighboring property owners. According to the order from Judge W. Earl Britt denying the request, one trip to the farm by the jurors would not be representative of the plaintiffs’ order and other complaints covering a much longer period. The jurors, therefore, had to reach their decision based on the contradictory evidence of nuisance presented in the case.
The North Carolina Right-to-Farm Law Did Not Prevent the Nuisance Case
Regular readers of this blog may wonder why North Carolina’s Right-to-Farm law didn’t prevent the outcome in this case. Right-to-Farm laws, enacted in all 50 states in varying forms, create a rebuttable presumption that farms and the normal sounds, smells, etc. they produce are not a nuisance. To read more about Right-to-Farm Laws, check out this past post. In North Carolina, the Right-to-Farm law protects farmers from nuisance claims when the area around the farm changes (for example- new residential development occurs) and neighboring property owners claim pre-existing farm uses create a nuisance. Judge Britt denied Murphy-Brown, LLC's contention that it was protected by the Right-to-Farm law and based his finding on the fact that the plaintiffs and their predecessors had lived in the area for generations and well before the operations of Kinlaw farm began; therefore, the plaintiffs’ nuisance claims had nothing to do with changed conditions in the area and the Right-to-Farm law did not apply. As I said above Right-to-Farm laws vary, for example Delaware's Right-to-Farm law has language similar to the North Carolina law and requires there to be a change in the area around the farm in order for the farmer to be protected from nuisance claims, however, neither of the Right-to-Farm laws in Maryland or Pennsylvania have this requirement.
The $50.75 Million Judgment Has Been Reduced to $3.25 Million
North Carolina has a law capping punitive damages to the greater of three times the amount of the compensatory damages, or $250,000. Compensatory damages, as the name suggests, are meant to compensate a plaintiff for a direct loss such as a diminution in property value or a breach of contract. By contrast, punitive damages are awarded to punish the defendant for reckless or negligent behavior. Many states have laws limiting damages in an attempt to reduce frivolous lawsuits.
The plaintiffs in Murphy-Brown were each awarded $75,000 in compensatory damages and $5 million in punitive damages for a total judgment against Murphy-Brown, LLC of $50.75 million. The jurors in the case were not informed about the state law capping punitive damages, however, and following the decision, on May 7, Judge Britt applied the North Carolina law and reduced the punitive damages in the case to $325,000 for each plaintiff, reducing the total judgment from $50.75 million to $3.25 million.
Where Will Murphy-Brown, LLC Go From Here?
According to a press release from Smithfield Foods, Inc., “[t]hese lawsuits are an outrageous attack on all animal agriculture (not only hogs, but poultry, cattle, etc.), rural North Carolina and thousands of independent family farmers who own and operate contract farms. Farmers are apparently not safe from attack even if they fully comply with all federal, state and local laws and regulations.”
Counsel for Murphy-Brown, LLC intend to appeal the decision to the Fourth Circuit Court of Appeals. The Fourth Circuit is the federal circuit court which would also hear appeals of federal cases from among other states, Maryland.