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Adverse Judgement Against Smithfield May Have Implications For The Egg Industry

05/02/2018

A jury in Bladen County, NC awarded ten plaintiffs $50 million following a trial alleging nuisance from odor and depreciation of property values. The verdict was rendered against Murphy-Brown-Smithfield Foods with respect to the hogs they own at Kinlaw Farm in the County. The contractor operating the farm was not a defendant.

The award to each plaintiff in the class was based on $75,000 for substantial and unreasonable interference with use and enjoyment of their property. The additional $5 million for each plaintiff represented punitive damages. The magnitude of the award will be reduced since the case was held in Federal court which limits the ratio of compensatory to punitive damages to a ratio of 1 to 10. Had the case been held in a North Carolina state court, compensatory damages would have been limited to $225,000 per plaintiff. The Defendant claims that the trial was unfair as the jury was not allowed to visit the plaintiff’s properties or hear expert evidence on odor-monitoring procedures.

Civil rights organizations have hailed the verdict as a “significant victory for community members who live next to factory feed lots”. Michelle Nowlin, a Professor of law and a supervising attorney for the Environmental Law and Policy Clinic at Duke University noted “The plaintiffs have suffered indescribable insults not just from the immediate impacts of the feed lots themselves, but also from decades of government failure to come to their aid.”

The case has obviously established a precedent and attorneys may well be attracted to the prospect of large jury verdicts against intensive livestock facilities including egg production complexes. Variations on the complaints of odor, flies, dust and environmental impact will obviously be raised. Even if cases are dismissed or if juries reject the plaintiffs’ allegations, the costs to of defend lawsuits will be substantial whether settled or tried.

Hog producers are obviously in a more vulnerable position than egg producers based on systems of manure handling. The North Carolina use of lagoons is the obvious source of nuisance as liquid hog waste is sprayed on land adjacent to residential areas. In the case of the egg production industry, flush systems and lagoons were abandoned decades ago to be replaced by high-rise houses. These 1970 and 1980-vintage systems present problems of flies and odor compared to the later belt-manure systems with on-farm drying or composting.

The Smithfield verdict should evoke contemplation of risks of lawsuits and the costs associated with defending these actions and the expense of settlements or adverse verdicts, even if punitive damages are not levied.