Insurance companies of famers tied to lawsuits already lost by Smithfield Foods’ subsidiary Murphy-Brown could be on the hook for millions of dollars in damages.
Eleven insurance companies of Murphy-Brown were named defendants in the case filed in North Carolina Business Court on March 5. Judge Gregory P. McGuire is presiding.
At issue is who pays for the judgments dealt to Murphy-Brown; it has lost all five nuisance lawsuits since the spring of 2018. The companies don’t believe they should have to pay, citing the hog waste as ordinary pollution in Murphy-Brown’s waste management practice.
They also believe if payment is required, the “other insurance” clauses in the policies would pay first. Farmers have sought their own policies for protection should a claim require reimbursement to Murphy-Brown.
The companies named in the lawsuit were Ace American and Ace Property & Casualty Insurance, American Guarantee & Liability, Catlin Underwriting Syndicate, Endurance Risk Solutions Assurance that was formerly known as American Merchants Casualty, Great American Insurance, Liberty Insurance Underwriters, Old Republic Insurance, St. Paul Fire & Marine Insurance, XL Insurance and XL Specialty Insurance.
The U.S. Fourth Circuit Court of Appeals in Richmond, Virginia, has yet to rule on any of the appeals; no payment for damages is due until the litigation is resolved.
The first case under appeal won’t be heard before September.
Back in North Carolina, another 21 cases are not yet scheduled. The next one is expected to involve a Sampson County farm owned by the Butler family.
In the five cases thus far, juries have awarded $549,772,400 in damages, a figure reduced by North Carolina punitive damage law to $97.9 million. That figure includes punitive and compensatory amounts.
Smithfield Foods is a subsidiary of the WH Group, which is based in Hong Kong. It is the world’s largest pork producer.
Duplin, Sampson and Bladen counties are the leaders in hog production for the state, and rank among the top 15 in the nation. The industry provides 46,000 jobs in North Carolina, which is second only to Iowa in hog production.
In Tar Heel, Smithfield Foods has the world’s largest production facility and employs about 4,000.
In all the cases, Murphy-Brown is named as the defendant. The practical implications, however, are that hogs have to be removed from farms that are deemed a nuisance by the jury.
Two of the cases decided thus far are linked to Bladen County.
The first case involved Kinlaw Farms, owned by Billy Kinlaw along N.C. 53 where about 15,000 pigs were being raised. The jury on April 26, 2018, said 10 neighbors were to be awarded $50.75 million, an amount reduced to $3.25 million by the punitive damages law.
The second decision came in the first case involving Joey Carter Farms near Beulaville ended June 29, 2018, with plaintiffs Elvis and Vonnie Williams awarded $25.13 million — $65,000 each in compensatory damages, $12.5 million each in punitive damages. The punitive cap, $250,000 each, put their combined award from the jury at $630,000.
Pender County farms involving Elizabethtown-based HD3 Farms of the Carolinas’ subsidiary Greenwood Livestock LLC, owned by White Lake businessman Dean Hilton, were involved in the third lawsuit. A judgment of $473.5 million on Aug. 3, 2018, included $450 million in punitive damages and $23.5 million in compensatory damages. State law reduced the combined amount to $94 million.
HD3 Farms has operations in Bladen, Sampson, Robeson, Scotland, Columbus, Duplin, Hoke and Pender counties.
The fourth case involved the Sholar Farm in Sampson County. The jury on Dec. 12 awarded eight neighbors between $100 and $75,000 compensation. Judge David Faber, citing a lack of evidence presented by lawyer Michael Kaeske, tossed the punitive damages claims.
Faber is the only judge other than Earl Britt to hear the cases.
The plaintiffs’ awards from the jury were $100 each to four of them, $1,000 to two of them, $25,000 to one and $75,000 to the eighth.
A second case involving Joey Carter Farms ended March 8, awarding 10 plaintiffs $420,000 in damages. The compensatory amount was $139,000, and the punitive was $281,000.