Smithfield Settles NC Hog Nuisance Case

OMAHA (DTN) -- Smithfield Foods Inc. settled with a group of North Carolina plaintiffs who won in court on a nuisance lawsuit against hog farms, after a federal appeals court on Thursday upheld a verdict in the case.

Early in 2018, juries in three separate trials in Raleigh, North Carolina, awarded punitive damages totaling more than $500 million to neighbors near hog farms in the state. The Kinlaw Farms case was part of these trials. A court later reduced damages to around $100 million.

A three-judge panel of the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia, issued a split decision on Thursday upholding the verdict but ruling the district court erred in how damages were determined.

Smithfield announced it had reached a settlement with the plaintiffs following the court's decision.

Keira Lombardo, Smithfield chief administrative officer, said in a statement the company disagreed with how the case was handled and would not share the details of the settlement.

"The lower court's actions in this case allowed plaintiffs' attorneys to unlawfully inflame the jury," she said.

"This resulted in outrageous awards by an urban jury against a highly regulated rural farming operation."

Lombardo said the company disagrees with the appellate court and points to a dissenting opinion by the panel.

"Judge (G. Steven) Agee's dissent finds that cumulatively erroneous actions by the district court judge in this case are 'so profound that a full new trial is necessary,'" she said.

"In the midst of a global pandemic where food shortages have been commonplace, it is now the time to keep our full attention on the important work of producing good food in a responsible and sustainable way -- rather than returning to the court for what would be ongoing and distracting litigation involving this farm and dozens of other farming operations. Farmers, grain growers, truck drivers, food processors and so many tens of thousands more in North Carolina who depend on the pork industry to support their families have lived under a cloud of uncertainty for too long."

Lombardo said the cases brought against the company's North Carolina farms are "part of a coordinated effort by plaintiffs' attorneys and their allies aimed at dismantling our safe, reliable and modern system of food production."

In March 2019, national and state agriculture interest groups asked a federal appeals court to overturn a $50 million nuisance judgment against Kinlaw Farms in North Carolina.

That appeal was filed by the American Farm Bureau Federation, National Pork Producers Council, North Carolina Farm Bureau and the North Carolina Pork Council. Back in May 2018, the federal court that resided over the trial reduced the Kinlaw Farms judgment to $3.25 million.

More than 20 lawsuits were filed by more than 500 plaintiffs who are neighbors of Smithfield Foods hog farms.

There are about nine million hogs on 2,300 farms in North Carolina. The brief said those farms generate about $11 billion in economic activity and 46,000 full-time jobs.

The groups made the case that liability and damages awarded are not allowed by North Carolina's right-to-farm law.

In 2017, an amendment to the law was passed to limit compensatory damages in nuisance suits to the reduction in fair market value and in rental value caused by a nuisance.

The Fourth Circuit ruled the plaintiffs in the case had rights to seek other damages in another existing law.

"The 2017 RTFA amendment limited available damages to only reduction in market value and rental value," the Fourth Circuit ruled this week.

"This without question would strip plaintiffs in pending suits of vested rights to damages noted even in appellant's authorities, such as 'reasonable costs of replacement or repair and restoration of the property to its pre-nuisance condition; and other added damages for incidental losses."

Todd Neeley can be reached at todd.neeley@dtn.com

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