In 2014 and 2015, 26 nuisance lawsuits representing over 500 North Carolina residents were brought against Murphy-Brown, a subsidiary of Smithfield Foods, in North Carolina federal court. The lawsuits involve 89 hog farms or “CAFOs” (Concentrated Animal Feeding Operations) in Eastern North Carolina. Although Murphy-Brown owns some of the farms itself, in most instances, Murphy-Brown contracts with independent farm owners. Under these arrangements, the hog farmers own the farm but Murphy-Brown owns the hogs and sets the operational rules. The cases were consolidated in 2015 for pre-trial litigation. The Court created five “Discovery Pool Cases” in which detailed discovery was taken and ordered two test trials, to be followed by monthly trials for the remaining cases. In 2018, the trials began and four cases reached jury verdicts, all in favor of plaintiffs.
The lawsuits alleged that the odor and flies from the effluent spray process at the hog farms caused a nuisance to the surrounding property owners, and that tractor trailers travelled through the area at night, creating noise and lights that prevented sleep. None of the lawsuits involved operational processes that broke any state or federal laws. Three of the test cases, all before the same federal court judge, resulted in substantial jury awards totaling almost $550 million. North Carolina’s punitive damages cap limiting punitive damages to three times compensatory damages or $250,000, whichever is larger, reduced the jury awards to $97.88 million. A fourth lawsuit was decided by jury in December 2018 before a different federal judge. That jury awarded $100,000 total in compensatory damages to all eight plaintiffs, but the judge ruled that plaintiffs failed to produce sufficient evidence of punitive damages.
When the lawsuits were filed, North Carolina had a Right to Farm Act, N.C. Gen. Stat. § 106-701 (2013), limiting the right to bring nuisance suits against agricultural farms. It read in relevant part:
“When agricultural and forestry operation, etc., not constituted nuisance by changed conditions in or about the locality outside of the operation.
(a) No agricultural or forestry operation or any of its appurtenances shall be or become a nuisance, private or public, by any changed conditions in or about the locality outside of the operation after the operation has been in operation for more than one year, when such operation was not a nuisance at the time the operation began.
(a1) The provisions of subsection (a) of this section shall not apply when the plaintiff demonstrates that the agricultural or forestry operation has undergone a fundamental change. A fundamental change to the operation does not include any of the following:
(1) A change in ownership or size.
(2) An interruption of farming for a period of no more than three years.
(3) Participation in a government-sponsored agricultural program.
(4) Employment of new technology.
(5) A change in the type of agricultural or forestry product produced. (a2)
The provisions of subsection (a) of this section shall not apply whenever a nuisance results from the negligent or improper operation of any agricultural or forestry operation or its appurtenances.” 106-701 (2013). The Act defines “agricultural operation” as “any facility for the production for commercial purposes of crops, livestock, poultry, livestock products, or poultry product.” § 106-701(b).
Further, in 2017, the legislature added a section that limited compensatory damages to the reduction in the fair market value of the plaintiff’s property caused by the nuisance, not to exceed the fair market value, for permanent nuisances, and to the diminution of the fair rental value of plaintiff’s property for temporary nuisances. N.C. Gen. Stat. § 106-702(a) (2017). The statute expressly did not prohibit or limit punitive damages. § 106-702(d) (2017).
At summary judgment, the Court found that the Right to Farm Act only applies to agricultural operations that become a nuisance due to changed conditions in the locality outside the agricultural operation. In re NC Swine Farm Nuisance Litigation, 2017 WL 5178038 at *5 (E.D.N.C. Nov. 8, 2017). Because the plaintiffs had used their properties as residences well before the operations began at the subject hog farms, the Right to Farm Act was inapplicable as a matter of law. Id. at *6.
In response to the Court’s findings and the large jury awards, North Carolina’s legislature acted swiftly and decisively in amending the statute in June 2018. The preamble to the amended statute states that “frivolous nuisance lawsuits threaten the very existence of farming in North Carolina” and “following the 1979 enactment, at least three succeeding General Assemblies in 1992, 2013, and 2017 tried to perfect a statutory framework that broadly fosters a cooperative relationship between farms and forestry operations and their neighbors across North Carolina.” However, “recently a federal trial court incorrectly and narrowly interpreted the North Carolina Right to Farm Act in a way that contradicts the intent of the General Assembly and effectively renders the Act toothless in offering meaningful protection to long-established North Carolina farms and forestry operations.” It further states that “regrettably, the General Assembly is again forced to make plain its intent that existing farms and forestry operations in North Carolina that are operating in good faith be shielded from nuisance lawsuits long after the operations become established.” Governor Cooper vetoed the amended statute, and the Senate overrode his veto in a 37-9 vote. The day after the override, the House voted 74-45 in favor of the bill. The Right to Farm Act now reads, in pertinent part:
“Right to farm defense; nuisance actions.
(a) No nuisance action may be filed against an agricultural or forestry operation unless all of the following apply:
(1) The plaintiff is a legal possessor of the real property affected by the conditions alleged to be a nuisance.
(2) The real property affected by the conditions alleged to be a nuisance is located within one half-mile of the source of the activity or structure alleged to be a nuisance.
(3) The action is filed within one year of the establishment of the agricultural or forestry operation or within one year of the operation undergoing a fundamental change.” N.C. Gen. Stat. § 106-701 (2018).
The definition of fundamental change remains the same. The language regarding changed conditions is eliminated. It also deleted the language permitting punitive damages, and instead added an express provision prohibiting punitive damages in private nuisance suits except in very limited circumstances:
“A plaintiff may not recover punitive damages for a private nuisance action where the alleged nuisance emanated from an agricultural or forestry operation that has not been subject to a criminal conviction or a civil enforcement action taken by a State or federal environmental regulatory agency pursuant to a notice of violation for the conduct alleged to be the source of the nuisance within the three years prior to the first act on which the nuisance action is based.” 106-702(a1) (2018).
The amended statute is a significant victory for the agricultural industry in North Carolina. The 2018 amendments substantially limit the availability of punitive damages, change the focus from the surrounding locality to the operation itself by eliminating the changed conditions language, thereby making it more difficult for pre-existing neighbors to bring suit, and removing the exception for nuisances caused by negligence or improper operation. In combination with the 2017 amendments limiting compensatory damages to fair market value of the harmed property, there is little financial incentive to bring suit. The likely result is that we will see fewer nuisance lawsuits against the agricultural industry in the future.
These cases are all pending on appeal, and this post may be updated accordingly.
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