A little more than a week after a jury handed down a landmark verdict to neighbors of a hog farm in Eastern North Carolina, the federal judge who presided over the trial reduced the damage sentence from more than $50 million to $3.25 million.
The ruling, entered by U.S. District Judge Earl Britt, comes in the first of a series of hog farm nuisance lawsuits filed against Murphy-Brown, a subsidiary of Smithfield Foods.
Murphy-Brown attorneys asked Britt to lower the jury award last week, arguing that under a 1995 state law, punitive damage awards should be capped at three times the amount of compensatory damages or $250,000, whichever is greater.
Though attorneys for the neighbors contended otherwise, many expected Britt's ruling.
The 1995 law capping damages that companies have to pay out was tested in the North Carolina courts after a couple sued Kmart. The couple had been taking a walk around the outside of a Kmart store after hours and security guards accosted them, according to the lawsuit that went to the state Supreme Court in 2004.
A jury had awarded the couple $23 million in punitive damages, but that was reduced to meet the $250,000-per-person cap.
Because of that case, Britt wrote in his order, he lowered the damages awarded by the jury on April 26.
Each of the 10 neighbors of the 15,000-head Kinlaw Farms in Bladen County now will receive $325,000 instead of the $5.075 million the jury decided they should get.
Smithfield has announced its plans to appeal the verdict.
Neighbors and environmentalists wondered whether the $50 million award would push Smithfield Foods, which describes itself as a "$15 billion global food company and the world’s largest pork processor and hog producer," to change its ways.
Now they question whether the decreased damages will have the same effect.
The company hasn't changed its hog waste disposal methods for decades.
Attorneys for the neighbors focused on the continued use of "anaerobic lagoons," where hog waste was stored behind the livestock pens, then liquefied and sprayed onto nearby fields.
Neighbors complain that the spraying sends the animal waste airborne and pushes the stench, clouds of flies and unwelcome film their way to coat their homes, cars and other outdoor surfaces.
The Kinlaw Farms neighbors successfully persuaded the jury that industrial-scale hog operations have known for decades that open-air sewage pits on their properties have created nuisances for those who live around the farms. Neighbors have long complained of noxious, sickening and overwhelming odors, stenches so heavy and thick that they cannot get it out of the clothes they wear to work and elsewhere.
While environmentalists and others hailed the verdict as a bellwether that could force industrial pork producers to be better neighbors, they also spoke of obstacles ahead for the neighbors in North Carolina.
North Carolina has about 9 million hogs on nearly 2,300 hog farm operations. Iowa is the only state with more hogs, showing an inventory of about 21.8 million in 2017.
The next trial is set for May 29 when two neighbors take their complaints against a Duplin County hog farm run by a retired Beulaville police chief before the same judge.
Caps on damages in NC
During the past couple of decades, North Carolina lawmakers have adopted legislation that caps punitive and compensatory damages.
In 1995, shortly after Republicans enjoyed much success in the 1994 midterm elections, Chuck Neely, a former Republican state representative, introduced the bill that capped punitive damages. Neely, a lawyer who now is a prominent lobbyist, touted the change as one that would protect businesses from being forced to settle “frivolous lawsuits that are intended to frighten businesses.”
Last year, the Republican-led General Assembly further limited how much neighbors of hog farms and other agricultural and forestry operations can receive in compensatory damages in a law that passed over Gov. Roy Cooper’s veto.
The lawmakers had discussed making the changes retroactive, but backed away from that.
In the case decided in federal court in late April, lawyers did not target the owners of Kinlaw Farms, but instead focused on the hog-production division of Virginia-based Smithfield Foods. Farm owners are subject to strict contracts from the Chinese-owned company which dictate how the local farmers raise the livestock owned by Smithfield.
More than 500 hog farm neighbors have filed dozens of lawsuits complaining about Smithfield hog operations and the stench, swarms of flies and spray related to the treatment of hog waste stored and processed on the properties.
As much as the first case was watched by environmentalists and the hog industry, some legal analysts say the second case could be more telling about the range of penalties that Smithfield could face.
The attorneys for the neighbors chose the first case to be heard by Britt.
Attorneys for Smithfield Foods chose the second case which will be tried in a Raleigh federal courtroom.