pigs

$50 Million awarded in NC hog farm case — wake-up call to ag

This verdict is a wake-up call to many in agriculture that these types of cases can occur and, at least at the trial level for now, can result in significant liability for agriculture.

In recent weeks, the big buzz in agricultural law was a verdict in North Carolina, finding a Smithfield Foods subsidiary liable for nuisance and awarding $50 million in damages to neighboring landowners. Today, we will take a look at that case, discuss why the Right to Farm statute did not apply, and consider how this might have played out in Texas.

Background

Smithfield Foods and subsidiary Murphy Brown, LLC contracts with a number of hog farmers in North Carolina to raise pigs.  Each farm raises the animals, but the animals are technically owned by Murphy Brown.  Neighboring landowners claim that odors, tractor and truck traffic, and pests caused by the hog farms are affecting their quality of life, property values, and use of their property.

For example, in the first case to go to trial, claims were made by neighbors of Kinlaw Farm, a 15,000 head production facility.  Importantly, plaintiffs did not prove that the farms were operating in violation of any permit or law.  For example, neighbors complained of a waste-storage lagoon, which was not illegal or in violation of any permit, but the neighbors claim is an outdated method of animal waste management.

Litigation

Twenty-six lawsuits were filed by hundreds of plaintiffs who live near hog farms that contract with Murphy Brown.  The actual hog farmers were not named as defendants, but instead it was the Smithfield subsidiary that was the named party.  All together, over 500 neighbors are part of these lawsuits. The legal cause of action set forth against Murphy Brown in each case was nuisance.  Essentially, a nuisance occurs when a defendant unlawfully or substantially interferes with the use and enjoyment of the plaintiff’s property.

Verdict

The case involving Kinlaw Farms was the first of twenty-six cases to go to trial, which lasted three weeks.  After deliberating for less than two days,  the jury sided with the plaintiffs and awarded $50 million to the 10 named plaintiffs in the lawsuit.  The verdict includes compensatory damages of $75,000 for each plaintiff, as well as a $5 million/plaintiff punitive damage award.

Murphy Brown has said it plans to appeal to the United States Court of Appeals for the Fourth Circuit.  In addition, the trial court recently granted Murphy Brown’s motion to cap punitive damages in the case.  Due to this cap–based upon a North Carolina statute limiting punitive damages–the court has entered a $3.25 million verdict, which will equate to 350,000 per plaintiff.  The Plaintiffs could appeal this ruling as well.

The second case is set to go to trial next month.

Pre-Trial Right-to-Farm Ruling

If you are like me, you are likely screaming, “What about Right-to-Farm?” by this point.  As you may recall from this prior blog post, every state has a Right to Farm statute, which provides an affirmative defense to agricultural operations facing nuisance suits if certain requirements are met.  In this case, the judge ruled prior to trial that the North Carolina Right to Farm Act was inapplicable.

The relevant portion of the NC Right to Farm Act provides, “No agricultural or forestry operation or any of its appurtenances shall be or become a nuisance, public or private, by any changed conditions in or about the locality outside of the operation after the operation has been in operation for more than one year, when such operation was not a nuisance at the time the operation began.”  [Read full statute here.]

The court focused on the language in the statute that an operation shall not be a nuisance “by any changed conditions in or about the locality outside of the operation.”  Plaintiffs argued that they or their predecessor landowners had lived in the area even prior to the farms being built.  Thus, there was not the sufficient changed condition for the Right to Farm Act to apply.  The defendants argued that there have been changes in condition since the farms began operating, namely, the number of people living in the farm’s vicinity has increased over time.  The court pointed to prior North Carolina case law applied this same rational and held that where a non-agricultural use did not extend to an existing agricultural area, the Right to Farm Act did not apply.  Thus, because some plaintiffs here resided on the land prior to the hog farm being built, the Right to Farm Act was not allowed to be raised as a defense.  It mattered not, reasoned the court, that the landowners previously used their land for agricultural purposes or that the area had historically been agricultural operations.

How Might the Texas Right to Farm Apply?

Given this analysis, I thought it might be interesting to look at how the Texas Right to Farm statute might apply.  Of course, every case is different and one can never predict what a judge or jury would do, but looking at the statutory language can provide some interesting insight.

The relevant portion of the Texas Right to Farm statute provides, “ No nuisance action may be brought against an agricultural operation that has lawfully been in operation for one year or more prior to the date on which the action is brought, if the conditions or circumstances complained of as constituting the basis for the nuisance action have existed substantially unchanged since the established date of operation.”  Further, the statute offers the following regarding the established date of operation:  “The established date of operation is the date on which an agricultural operation commenced operation. If the physical facilities of the agricultural operation are subsequently expanded, the established date of operation for each expansion is a separate and independent established date of operation established as of the date of commencement of the expanded operation, and the commencement of expanded operation does not divest the agricultural operation of a previously established date of operation.”

As you will see, this language is different than that in North Carolina and would likely lead to a different result.  In Texas, once an agricultural has been in operation for at least one year, and the conditions complained of as causing the nuisance are unchanged, the Right to Farm Act applies.  The focus in Texas, then, in on the operation itself and the conditions at the operation that allegedly constitute a nuisance, where in North Carolina, the focus is on the conditions in or around the operation itself.  This subtle difference in language in the statutes could result in a completely different outcome were the same case brought in Texas.

Take Aways

First, this verdict has been a wake-up call to many in agriculture that these types of cases can occur and, at least at the trial level for now, can result in significant liability for agriculture.  The fact that so many suits were filed by so many neighbors of farms contracting with Smithfield, all represented by the same counsel, indicate the coordinated effort to bring this type of litigation.

Second, the difference between the NC and TX Right to Farm Act offers a good reminder that state laws differ and even simple differences in language can have dramatically different results in a courtroom.

Finally, from a policy perspective, this case should be concerning to agriculture.  The fact that the farm operated within the bounds of applicable laws and permits, but not in a manner in which the plaintiffs would have liked, is a standard and precedent that could potentially be problematic if it were to take root.

Source: Texas Agriculture Law Blog

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