In damning opinion, federal appeals court rules against Murphy-Brown in hog nuisance suits

Punitive damages will be recalculated, but court sides with plaintiffs on all other arguments 

This is a developing story.

Update 6:25 p.m.: Smithfield issued a statement saying they have “resolved these cases through a settlement that will take into account the divided decision of the court. Information about the terms of the settlement will not be disclosed.”

Murphy-Brown lost nearly every legal argument it posed before the Fourth Circuit Court of Appeals, which, in a damning opinion issued this afternoon reaffirmed a jury verdict awarding monetary damages to 10 neighbors who had filed nuisance suits against the world’s largest pork producer.

After 10 months since the oral arguments, the Fourth Circuit affirmed a decision issued by the District Court that Murphy-Brown’s operation of its industrialized hog operations — open lagoon and spray field systems, “dead boxes” and all-hours truck traffic — unduly harmed neighbors’ quality of life. The only point that Murphy-Brown prevailed on was the role of executive salaries and parent company profits in calculating punitive damages.

The case centered on neighbors of the Kinlaw Farm in Bladen County, a contract grower for Murphy-Brown/Smithfield Foods. However, the suit was filed in 2018 against Murphy-Brown, which controls every aspect of the farm, from the type and amount of feed, to the number of hogs raised, to the lagoon-and-sprayfield waste management systems.

After more than two weeks of hearing testimony, a jury awarded each plaintiff  $75,000 each in compensatory damages, plus another $5 million apiece for punitive damages. The total: Upward of $50 million, an historic amount.

Punitive damages can be awarded if a jury finds a defendant “committed fraud,”  “acted in malice” or in “wanton neglect.”

There will be no new trial, the appellate court ruled, only a rehearing on the amount of punitive damages that can be awarded to neighbors without considering the parent company or executives’ financial information. Compensatory damages are unaffected.

At the district court level, the neighbors were represented by Wallace & Graham, based in Salisbury, who had hired Michael Kaeske of Texas to argue the case. McGuireWoods in Richmond, Va., represented Murphy-Brown.

In the 144-page opinion, appeals court judges disarmed Murphy-Brown’s many defenses, including its major points:

• Murphy-Brown had tried to reel in Kinlaw Farms as a responsible party, even though the pork producer dictates the terms of the operation. Had Murphy-Brown succeeded in its argument, the company could have further buttressed its claim that the nuisances suits, of which there are dozens, harmed family farmers. In fact, Murphy-Brown is responsible for the damages.
• The company had claimed that the Right to Farm Act of 2017, which sharply limited the amount of damages neighbors could recover in case they won in court, was retroactive. (Gov. Cooper vetoed the bill, but lawmakers overrode it.) By the time that legislation was enacted, dozens of nuisance suits had been filed in federal court against the company. Even though the text of the bill said it would be effective when it “became law and after that date,” Murphy-Brown and several lawmakers said it merely “clarified” previous farm acts and should apply retroactively.
  Original bill language did say it should apply retroactively, but was removed over concerns it could not pass constitutional muster.
  The appellate court disagreed, saying “we have nothing to conclude that the 2017 Right to Farm Act amendments should apply retroactively. … If made retroactive it would reward powerful defendants who faced with a possible judgment against them could escape responsibility by raising a specter of doubt about something the state’s courts have long made available.”
• Murphy-Brown also lost its claim that the expert testimony of Shane Rogers should be struck. Rogers is an environmental engineer who testified that hog feces had been found on neighbors’ homes. He based these findings on Pig2Bac, a technology that can determine the fingerprint of fecal material. Although the technology had not been peer-reviewed, the court said that fact was only one consideration of its reliability.

The court also found that Murphy-Brown knew that its farms were causing problems for the neighbors, even without formal complaints. “Murphy-Brown’s own collection of media articles reporting conditions associated with its farming practices and policies, as well as its knowledge of studies detailing the effects of lagoon and spray field operations and types of effective remediation,” showed that the company was fully aware of the odor, flies, buzzards and truck traffic. “Yet despite this knowledge,” the court wrote, Murphy-Brown “persisted in practices it knew were reasonably likely to result in injury to neighboring properties.”

Nor did the court buy the company’s argument that the Kinlaw farm operated legally and with required permits, and thus should not be found liable for nuisance. “This is beside the point,” the court wrote. “Lawful enterprises can constitute a nuisance ….”

During the trial, Murphy-Brown executives testified that the company had taken steps to reduce impacts on neighbors. This included changing the type of feed to decrease odors from the manure. However, the court determined that these steps “were motivated by profit or efficiency of operations as oppose to concern for neighbors. … The fact that Murphy-Brown policies expressly encouraged growers to avoid spraying at times neighbors were known to be outside demonstrates that [the company] knew its spray field operation was still likely to interfere with use and enjoyment of their property.”

The neighbors, wrote the court, “presented clear and convincing  evidence that Murphy-Brown knew about the likely harms, denied their existence and fought for them not to come to light.”