By Charlotte Smith
On the last Friday in January, the Fourth Circuit Court of Appeals in Richmond, Virginia made up of a three-judge panel heard oral arguments in the first historic hog nuisance lawsuit, McKiver v. Murphy- Brown. Since 2018, North Carolina federal district court juries have awarded 34 plaintiffs in five lawsuits over $500 million in compensatory and punitive damages for hog farm nuisance claims; all five verdicts were capped and appealed.
Judge J. Harvie Wilkinson III appointed by President Ronald Reagan, G. Steven Agee, appointed by President George W. Bush, and Stephanie Thacker, an Obama appointee, all made up the three-judge panel overseeing the appeals process. Attorney Stuart Raphael, represented Murphy-Brown, a subsidiary of Smithfield Foods during the appeals arguments last week. The plaintiffs’ appellate attorney, Attorney Tillman Breckenridge stood as the plaintiffs’ appellate attorney during the proceeding.
Raphael for Murphy-Brown mentioned there were seven significant issues in the McKiver v. Murphy-Brown case, but only touched on some of them during his timed oral arguments. According to Raphael the reasons to overturn the verdict in the cornerstone case are (1) the contract farmers are “indispensable parties”, (2) the finances of WH Group and executive pay were irrelevant and created prejudices toward his client, (3) the 2017 North Carolina Right to Farm Act, (4) unfair expert witness selection, and (5) nothing constituted punitive damages.
Local hog farmer, William (Billy) Kinlaw of Dublin and his farms in Bladen County were listed as “indispensable parties” during Raphael’s opening appeals arguments.
In the April 2018 McKiver v. Murphy-Brown lawsuit the jurors unanimously agreed that Murphy-Brown, which owned the hogs at the Kinlaw Farms, “substantially and unreasonably interfered with the 10 plaintiff’s use and enjoyment of their property,” and awarded each of the plaintiffs $75,000 on those grounds, and awarded punitive damages in the amount of $5 million for each plaintiff. Kinlaw Farms was depopulated due to the lawsuit ruling according to Murphy-Brown representatives.
After one of the judges asked Raphael to state the jurisdiction in regards to the “indispensable parties”, Raphael said, “The farmer is in breach of the contract… the farmer had the responsibility to control the odor,”
Raphael stated, “The farm is shut down,” he added, “That is an interest of the farmer.”
He then cited cases as examples of contract parties being ruled as the paradigm and indispensable parties. He explained, “It not only shuts down the farm, but it leaves the farmer on the hook for having to pay the judgement to Murphy-Brown, so the farmer’s interests are clearly impaired.”
“Whatever happened to Kinlaw was an independent decision by Murphy-Brown,” Judge Wilkinson countered. “They could have taken the pigs for a number of reasons other than a verdict.”
Next the judge asked about the punitive damages in the case. During the April 2018 four-week lawsuit trial jury members awarded the 10 plaintiffs, including Joyce McKiver a total of $750,000 in actual damages and $50 million in punitive damages. However the punitive portion was capped at $2.5 million due to North Carolina State law.
In lawsuits involving punitive damages, Rapheal explained, there has to be evidence proving without a reasonable doubt, “willful and wanton conduct”, which is disregard to the rights and safety of others. The plaintiffs failed to prove “willful and wanton conduct”, according to Rapheal.
Judge Thacker asked Breckenridge during the plaintiff’s rebuttal time, “What happened at Kinlaw that would have subjected Murphy-Brown to punitive damages, what’s the answer to that?”
Breckenridge answered the judge with examples from the trial. Distance to neighbors, lack of buffers, and the farm operations were all controlled by Murphy-Brown, according to Breckenridge.
Breckenridge countered Rapheal’s argument about punitive damages by pointing out the truck drivers’ 2 a.m. trips to the farms “with their honking and loud noises”. He stated, Murphy-Brown dictated the hours of operations for truck drivers and where to put the additional farm. He also cited complaints by neighbors about the trucks, flies and the smells.
No one contacted Murphy-Brown complaining nuisance issues at Kinlaw Farms, according to Rapheal. Only one complaint was made and it was to Mr. Kinlaw by Ms. Joyce McKiver.
Judge Wilkinson said, “Murphy-Brown’s contractual language can require technological advancements. Can you assert control and use it to your advantage and then back away from the control when it comes to a verdict? … I’m just wondering whether you’re wearing two masks.”
After referencing Smithfield and Murphy-Brown’s agreements with Kinlaw Farms, the North Carolina Attorney General and the company’s compliance with state hog farm regulations, Rapheal raised the question, “What happened at Kinlaw that would warrant punitive damages?” He added, “They don’t have a good answer for that. There was nothing specific to Kinlaw. There was no violation of North Carolina law.”
Rapheal also cited the 2017 North Carolina Right to Farm Act as another reason the punitive damages should not have been awarded in the case.
Judge Wilkinson said, “The Right to Farm Act does not apply to pending cases.”
Rapheal objected to the judge’s comment citing a previous court ruling.
After the punitive damages issue was addressed next came the arguments in reference to the Daubert standards not being applied to Dr. Pamela Dalton, one of the defense’s key expert witnesses. Daubert standard is a set of criteria used to determine the admissibility of expert witness testimony in federal court.
The testimony of plaintiffs’ witness Shane Rogers about odors and the presence of hog fecal bacteria on the neighbors’ houses should not have been allowed, Rapheal argued. “The odor is not as they claim it is,” he stated.
Attorney Breckenridge countered Rapheal’s argument about the Daubert standards by stating the plaintiff’s side also had expert witnesses excluded from the hearings, however, he could not name the experts or what the expert testimonies would have argued.
Judge Agee addressed his issues with Breckenridge about the plaintiff’s expert witness, Shane Rogers, and Rogers’ lack of experience and education in the matter of odor. Agee also cited issues with Dr. Dalton, who is a qualified expert not being allowed to testify.
Breckenridge said Dr. Dalton’s testimony was not allowed because she admitted she had never reviewed the NC standard for nuisances and she could not call the plaintiff’s complaints unreasonable.
“When it comes to expert witnesses, the likelihood of confusion and misleading the jury becomes very high because they are experts,” Judge Agee said.
“It is a legitimate issue,” Judge Wilkinson stated. Then he asked, “But in the course of a four week trial, did it affect its substantial rights?”
“Absolutely”, Rapheal stated, “That should not have come in because we were not allowed to put in our counter testimony that objective measurements showed that odor wasn’t significant.”
This is the lead case and will control the outcome of the other cases, Rapheal added.
Judge Wilkinson interjected, “I’m not sure I agree with you.”
Judge Wilkinson commented after referencing the complaints in the transcripts, “Yes, the hog farming certainly provides many jobs in eastern North Carolina. It’s important to the economy and national food supply. But it’s harmful to the people who live nearby. It’s got to be environmentally harmful to the waterways. Nobody wants another Flint, Michigan. It can’t be good for children’s respiratory systems, these odors talking about wheezing and headaches.”
“If this were my property I’d be outraged at some of these conditions that were allowed to persist,” Judge Wilkinson continued, “less fortunate citizens have property rights, too. They have a right to good health and enjoyment of their property. If this were some McMansion surrounding hog farming operations, or houses of the affluent and more politically powerful were here, wouldn’t these conditions have been cleared up sooner rather than later? That is my problem.”
“I understand some people don’t agree with this type of farming, but that’s a legislative judgement,” Rapheal stated, “If they are going to get punitive damages, you’ve got to prove it for this farm.”
Murphy-Brown and Kinlaw Farms were in compliance with the state laws, he explained.
“Under the theory you articulated every farm would be subject to punitive damages, and that just can’t be right,” Rapheal said to Judge Wilkinson.
Murphy-Brown is an independent company, its second tier company is Smithfield, the trial court treated all of those entities as one and the same, Rapheal explained. “That would be like someone coming to me because they have a claim against my daughter. That’s never been the law,” Rapheal said.
The plaintiff’s attorney, Michael Kaeske, emphasized multiple times during the 2018 trial Smithfield is a multi-billion-dollar company and the WH Group is a foreign company from China. Kaeske also submitted Smithfield and WH Group’s executive multi-million dollar salaries.
Agee said, “I don’t see how any of that can be relevant.”
“Isn’t that just throwing a dead rat on the table?” Wilkinson said in reference to Kaeske being allowed to showcase the other company’s executive’s salaries during the trial.
“This is not a case of an industry under attack, this is not a case where North Carolina agriculture will fall apart,” Breckenridge stated in closing arguments.
Judge Agee stated to Attorney Breckenridge, “…your clients got all the benefits of a piercing claim without ever proving it.” Agee cited the multi-million dollar figures of non-parties with foreign influences as being irrelevant to the case.
“It was relevant,” Breckenridge stated, but did not address the topic directly.
Then Agee asked Breckenridge directly, “How is the evidence of x billion dollars of a Chinese holding company, that’s not a party to the litigation relevant to what this defendant does or this defendant is liable for?”
Breckenridge answered by referencing the 2018 trial’s cross examination testimony of Murphy-Brown’s president, in which, the president stated Murphy-Brown would have to get the funding to address the odor issues from Smithfield.
After the oral arguments were heard the court took a recess with no public mention of when the outcome of the appeal verdict will be announced. It could be weeks, even months before the ruling is heard in the McVicker v. Murphy-Brown case.
The handful of lawsuits being appealed are in conjunction with a total of 26 lawsuits the hog industry faces with over 500 plaintiffs involving 89 southeastern North Carolina farms. In the cases there are 75 independent contract farms and 14 Murphy-Brown owned farms facing the nuisance lawsuits, according to Raphael.
Murphy-Brown also is currently involved in court cases due to their insurance companies refusing to cover the legal damages incurred by the nuisance litigations.