Litigation related to Smithfield Foods

Litigation related to Smithfield Foods mostly consists of nuisance suits related to the disposal of hog waste using anaerobic lagoons. State governments have responded to the suits against Smithfield and similar litigation by strengthening right-to-farm laws.

Nuisance suits

North Carolina

About 500 plaintiffs in 29 cases have sued Smithfield Foods through its subsidiary Murphy-Brown alleging harm from odors and insects associated with anaerobic lagoons. As of July 2019, a federal judge required the two sides to take turns picking cases to establish a typical case value for use in a negotiated settlement.[1][2]

In April 2018, a jury in federal court awarded ten plaintiffs who lived close to a hog farm, Kinlaw Farms in Bladen County, with 15,000 animals a total of $750,000 in compensatory damages and $50 million in punitive damages. Kinlaw Farms was not named in the suit. The farm passed all state regulatory investigations and was never the subject of a complaint from its neighbors until this lawsuit was filed.[3] The award for punitive damages was adjusted downward as mandated by North Carolina law that caps punitive damages at a level equal to three times the award for compensatory damages, or $250,000, whichever is greater.[4] Under this law total damages were reduced to $3.25 million.[5]

In July 2018, two plaintiffs, who were neighbors of a Smithfield operation in Duplin County, were awarded a $25 million verdict.[1] The farm in question was owned by Joey Carter. This judgment was rendered despite the fact that the Carter farm had always met or exceeded the requirements of North Carolina's laws and regulations governing the raising of hogs, invested in modern technologies to aid in waste disposal, and responded to concerns raised by neighbors in a timely and responsible manner. Joey Carter was not sued.[6]

Joey Carter started raising hogs in 1984. Since then, dozens of people have constructed houses near his farm. One of his neighbors stated in court testimony, “This farm is not a nuisance, it’s a blessing. Nobody’s closer than I am. There’s no issue here.” Another neighbor said in their testimony." No plaintiff alleged medical issues or property damage from Carter's farm. One plaintiff alleged that the nutrients being used on the Carter property were drifting onto his property. Testing determined that actual source of his complaint was human waste from nearby septic systems.[7]

Immediately after this verdict, 1,000 to 1,600 people attended a rally on a Duplin County farm to support farmers in their struggle against nuisance suits. North Carolina's lieutenant governor, speaker of the house, agriculture commissioner, and a state legislator attended.[8]

In December 2018, eight plaintiffs who live near a contract farm in Sampson County won a verdict against Smithfield Foods. Four plaintiffs received $100 in compensatory damages. Two won $1,000 in compensatory damages. One received $25,000 in compensatory damages. One elderly female plaintiff who lived close to the farm and grew up nearby was awarded $75,000 in compensatory damages. A judge ruled that the plaintiffs did not provide enough evidence to justify the award of punitive damages. Before and during the trial, many residents of the area planted yard signs that read, "Stand for hog farmers."[1][9]

In March 2019, a jury awarded only $440,000 to ten plaintiffs who allegedly suffered due to nuisances from a Smithfield operation in Duplin County that raised about 5,000 pigs. Smithfield appealed this judgment in the 4th United States Circuit Court of Appeals.[2]

Regarding the above appeal, Smithfield Foods stated in a press release: "These lawsuits are an abuse of our legal system, one that bypasses decisions made by lawmakers and regulators. As with the first three trials, the negative result is due in large measure to rulings by the court that our attorneys believe are incorrect. These errors skewed the evidence presented in favor of plaintiffs and prejudiced our ability to defend the case, our company, our industry, family farmers, and all agriculture.”[2]

Farm trade groups and sympathetic politicians have openly complained that these suits endanger their industry. North Carolina changed its right-to-farm law to further protect farmers from frivolous lawsuits. The language of the law was substantially altered to more narrowly and clearly define what qualifies as a nuisance while limiting when plaintiffs may be awarded punitive damages.[6]

Owners of the farms at the center of this dispute were not allowed to tell their side of the story due to a gag order that was in place until it was lifted by United States District Court Judge Earl Britt on September 3rd, 2018. Earl lifted the gag order, which he had imposed, right before the United States Court of Appeals for the Fourth Circuit was able to rule on a petition to overturn it. The National Pork Council and the North Carolina Pork Council filed an amicus brief in support of the petition to the Court of Appeals. They argued that gag orders have to be carefully crafted to be constitutional, that there was no compelling need for such an order in these cases, and that the order issued was vague, overbroad, and ineffective.[10][11]

The jurors were not allowed to visit the farms in question or the areas around them in all of these cases.[10]

The cases presided over by Judge Earl Britt have ended with dramatically different verdicts than those heard by Judge David Faber.[5]

Bifurcation of compensatory and punitive damages

Smithfield moved to bifurcate the issues of its liability for compensatory damages and its liability for punitive damages. This motion was granted on October 24th, 2018 by Senior United States District Judge David A. Faber.[12] Research shows that bifurcating trials in this manner creates more uniform verdicts for compensatory damages and decreased the chance of juries awarding extremely high judgments for compensatory damages. Bifurcation also results in lower awards for compensatory damages in cases of involving minor or less severe injuries while resulting in higher awards for in cases where injuries are severe. Jurors report they feel they use evidence more appropriately in bifurcated trials.[13]

As of September 24, 2019, jurors in the cases mentioned above have awarded a total of $549,772,400 in damages. These damages have been reduced to $97.9 million in accordance with North Carolina's laws limiting punitive damages.[5]

Petitions

In 1991, a petition signed by 25 residents of Duplin County asked for a hog facility to be built on a different location, but on the same parcel of land, than the one initially proposed on a building permit. This petition has been used as evidence by plaintiffs attorneys in at least two cases. Fifteen of the same residents signed a new petition in support of the farms. This petition was not allowed into evidence. Doug Pierson, a signer of both petitions, said, "We did sign the petition in 1991 and then built our house in 1992. It was mostly because of the fear of the unknown. Since then my wife walks with the dog every day and I run. We’ve held engagement parties outside around our pool, we’ve never had a problem with smell or anything.”[8]

Appeals

Smithfield appealed the five verdicts from North Carolina. The five cases were consolidated at the appellate-level and are now known as Joyce McKiver, et al. v. Murphy-Brown, LLC. Twenty-one cases with about 500 plaintiffs will not be tried until this appeal is resolved. Arguments concluded on January 31, 2020. Judges have 90 days to issue a decision. The appeal was heard by the 4th United States Circuit Court of Appeals.[14]

Questionable evidentiary decisions made by Judge Earl Britt are an important part of the case. Britt allowed evidence that was entirely unrelated to the question of what, if any, damages were suffered by the plaintiffs and whether or not the respondent was responsible for them. For example, Britt allowed testimony about the compensation of and other senior managers to influence punitive damages, and he allowed the plaintiffs to use an expert witness but refused to allow the respondent to call their own expert on the same subject matter. The definition of "willful and wanton misconduct" applied by Britt is also at issue.[14]

Lawyers for Smithfield argued that none of the farms in these five cases had ever been cited for violations of state laws regulation hog farms and that none of the plaintiffs in these cases had ever complained about the issues for which they brought suit. [14]

Legislation

The state legislature passed the North Carolina Farm Act of 2018 to help reduce the exposure of farmers to unreasonable litigation and high punitive damage awards. Governor Roy Cooper vetoed the act, but the legislature overrode his veto. The new law does not apply to lawsuits that have already been filed.[8]

Insurance claims

In early 2019, Smithfield sued several of its insurance companies. Smithfield has filed suit against ACE American Insurance and Old Republic Insurance for breach of contract. It has also filed suit against ACE Property & Casualty Insurance, American Guarantee & Liability Insurance, Caitlin Underwriting Syndicate 2003, Endurance Risk Solutions Assurance, Great American Insurance Company of New York, St. Paul Fire & Marine Insurance, XL Insurance America, and XL Specialty Insurance seeking trebled damages and legal fees for unfair claim settlement and deceptive business practices.[15]

Smithfield has filed claims with its insurers to recover its legal fees and judgments owed due to nuisance lawsuits filed in North Carolina.[15]

Virginia

In February of 1978, Virginia's State Water Control Board sought civil penalties against Smithfield for failing to make improvements to mitigate wastewater discharge into the Pagan River in a timely manner. In June of that year, the state attorney general accepted an out-of-court settlement that included a $25,000 payment.[16]

In 1985, a federal judge in Richmond fined a Smithfield subsidiary about $1.2 million in a Clean Water Act suit filed by the Chesapeake Bay Foundation and the Natural Resources Defense Council.[16]

Labor disputes

The Smithfield Packing plant in Tar Heel, North Carolina, was the site of a 15-year dispute between the company and the United Food and Commercial Workers Union, which had tried since the early 1990s to organize the plant's roughly 5,000 hourly workers.[17]

After demonstrations, lockouts, and a shareholder meeting that was disrupted by shareholders supporting the union, the union called for a boycott of Smithfield products. In 2007, Smithfield countered by filing a federal racketeering lawsuit against the union.[17] The following year Smithfield and the union reached an agreement, under which the union agreed to suspend its boycott in return for the company dropping its racketeering case and allowing another election. In December 2008, workers voted 2,041 to 1,879 in favor of joining the union.[18]

See also

References
  1. Tamarov, Maxim (16 December 2018). "Dixon: Hog farmers win battle, not war". The Daily News. Retrieved 26 July 2019.
  2. Shaffer, Erica (11 March 2019). "Smithfield Foods to appeal judgment in 5th nuisance lawsuit" (Press release). Smithfield Foods. Meat + Poultry. Retrieved 2019-07-25.
  3. Sara Brown (April 26, 2018). "BREAKING: Jury Adds $50M Damages to Smithfield Nuisance Case". Farm Journal's Pork.
  4. JoAnn Alumbaugh (July 2, 2018). "Another Smithfield Hog Farm Found Guilty by Jury". Farm Journal's Pork.
  5. Staff (24 September 2019). "Hog lawsuits still unresolved in appeals court". Richmond County Daily Journal. Champion Media. Retrieved 26 September 2019.
  6. "Curliss: If it can happen to Joey Carter, it can happen to anyone". National Hog Farmer. 17 January 2019. Retrieved 26 July 2019.
  7. "WHAT FARMERS CAN LEARN FROM THE HOG NUISANCE SUITS IN NORTH CAROLINA". Successful Farming. 25 February 2020. Retrieved 5 March 2020.
  8. King, Donna (13 July 2018). "Residents file petition in support of farming neighbors". North State Journal. North State Media LLC. Retrieved 24 October 2019.
  9. "Judge rules no punishing Smithfield Foods in hog farm nuisance case". WRAL.com. 13 December 2018. Retrieved 14 August 2019.
  10. JoAnn Alumbaugh (September 6, 2018). "Pig Farmer Joey Carter was Blindsided - It Could Happen to You". Farm Journal's Pork.
  11. National Pork Producers Council (September 3, 2018). "Judge Lifts Gag Order in North Carolina Nuisance Suits". Farm Journal's Pork.
  12. Bifurcation decision by Judge David A. Faber (24 October 2018)
  13. Adams, Christine M. Shea; Bourgeois, Martin J. (2006). "Separating compensatory and punitive damage award decisions by trial bifurcation". Law and Human Behavior. 30 (1): 11–30. doi:10.1007/s10979-006-9001-8. PMID 16729206.
  14. Wooten, Alan (1 February 2020). "Hog lawsuit appeals heard; judges have 90 days to decide". Bladen Journal. Retrieved 6 February 2020.
  15. Scott Holland (Mar 21, 2019). "Smithfield says insurance companies breached contract regarding nuisance lawsuits". North Carolina Business Daily.
  16. Staff (29 May 2013). "Timeline | The history of Smithfield Foods". The Virginian-Pilot. Retrieved 31 October 2019.
  17. Maher, Kris. "Firms Use RICO to Fight Union Tactics," Wall Street Journal, December 10, 2007.
  18. Greenhouse, Steven. "After 15 Years, North Carolina Plant Unionizes", The New York Times, December 13, 2008.
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