What does the $50M hog farm verdict mean for livestock farms?

On April 26, 2018, a North Carolina jury awarded 10 plaintiffs a total of $50 million in punitive damages and $750,000 in compensatory damages for damages allegedly caused by a nearby hog farm. A copy of the unanimous verdict form awarding each plaintiff $5.075 million is available here. Punitive damages in North Carolina are capped by state law at three times the amount of compensatory damages. The plaintiffs' attorneys argued that applying the damages cap in this case was unconstitutional, but the judge rejected that argument, and reduced the award to $325,000 per plaintiff.  

This case was one of 26 federal lawsuits filed against Murphy-Brown, a subsidiary of Smithfield Foods, over waste-management practices. The case focused on Kinlaw Farms, a North Carolina hog farm which contracts with Murphy-Brown to raise about 15,000 pigs. Plaintiffs did not name Kinlaw Farms as a defendant in the case, and instead focused on the deeper pockets of Murphy-Brown (as part of Smithfield Foods).

Testimony during the case alleged Murphy-Brown should have done more to modernize its manure management, like CFOs in other states have done. The plaintiffs' attorney said that despite a court order in Missouri to cover lagoons and use a different spray system, the farms in North Carolina use open air lagoons and outdated spray technologies. Smithfield's attorney countered that the jury should focus on the farm at issue, not methods used in other states where temperatures and lagoon construction rules were different. Smithfield has promised to appeal, pointing out that the jury was not allowed to visit the farm or hear evidence of odor measurements at the farm.

Should farmers in other states be worried? Livestock operators should always do their best to minimize any negative effects from their operations. Most Midwestern hog farms use covered waste pits, not open lagoons. Many farmers here inject their manure into the soil instead of spraying it on top. Farm nuisance cases are very fact-specific, so it is hard to draw any broad conclusions from the North Carolina jury verdict. Testimony from state regulators, neighbors, farmers, and other parties is important, as is the evidence of the farm's waste management practices. Regulatory requirements vary from state to state, and a livestock operation should ensure it is complying with all applicable laws. 

Most states (including North Carolina) have passed some versions of a Right to Farm Act (RTFA), which provide some protection for livestock producers. But the RTFA did not protect Smithfield in this case. Before trial, the court ruled that North Carolina's Right to Farm Act (N.C. Gen. Stat. § 106-701) did not apply as a matter of law. For the North Carolina RTFA to apply, the agricultural operation must have become a nuisance because of changed conditions in the locality outside the agricultural operation. The Court held the plaintiffs' nuisance claims had nothing to do with changed conditions in the area, and therefore decided the RTFA would not bar those claims.

The application of a RTFA statute is a state law question, so the federal trial court's interpretation of the North Carolina statute should not change the RTFA analysis in other states. Regardless, this case is a good reminder to livestock farmers to work with their neighbors and maintain best manure management practices.