Nuisance lawsuits against Smithfield Foods could leave hog industry in doubt

WHITE OAK — The people who live in a row of small homes on a short dirt road leading to Billy Kinlaw’s hog farm don’t have a problem with him, and they don’t want to see him go out of business.

Still, those neighbors appeared in federal court in April as plaintiffs in a lawsuit that says Kinlaw’s farm stinks, creates clouds of flies and lowers property values. The neighbors complain about the tractor-trailers that rumble past their homes and the buzzards that swoop in to feed on dead hogs. Some days, they say in the lawsuit, the stench is so bad from thousands of hogs that they can’t go outside.

On April 26, a federal jury sided with the neighbors in a $51 million judgment. The jurors ruled that the farm is a legal nuisance and effectively putting Kinlaw out of business. Only four of Kinlaw’s 12 barns still hold hogs. Soon, all of the animals will be gone.

Kinlaw did nothing wrong. He broke no state laws. He said he has always been told that his farm was among the nicest — if not the nicest — of the 2,200 hog operations in North Carolina. He said he never heard neighbors complain until the lawsuit was filed.

It wasn’t even Kinlaw who was being sued. The lawsuit, and nine others expected to be heard this year, was against Murphy-Brown LLC, the hog-production arm of the corporate giant Smithfield Foods.

Murphy-Brown supplies the hogs under contract with Kinlaw and thousands of other growers who raise them for Smithfield. After the jury’s verdict, Murphy-Brown cut off its supply of hogs to Kinlaw.

Lawyers for the plaintiffs didn’t seek an order for injunctive relief that could have required Smithfield Foods to fix anything that might be causing problems for Kinlaw’s neighbors.

“By that fact, Smithfield has no choice” but to shut down Kinlaw’s farm, said Joyce Fitzpatrick, a Smithfield spokeswoman. “It could be sued again.”

Though the jury awarded nearly $51 million to Kinlaw’s neighbors, that figure was reduced to about $3 million under state law.

Still, that kind of money is getting attention. 

In all, about 500 people have joined 26 nuisance lawsuits against Smithfield. No one can predict the outcome of those cases, but Smithfield and state agricultural officials say a lot is at stake.

“The lawsuits are a serious threat to a major industry, to North Carolina’s entire economy, and to the jobs and livelihoods of tens of thousands of North Carolinians,” said Keira Lombardo, Smithfield’s senior vice president of corporate affairs, in a statement.

Ken Sullivan, Smithfield’s president and chief executive, said that dire warning applies not only to Smithfield, but to poultry growers and every other agricultural industry in the state.

“If we keep losing these suits, it is going to be very difficult to continue to do business in North Carolina,” Sullivan said Friday in a telephone interview. “In North Carolina, do we want agriculture or not? If we don’t, I don’t know what there is going to be in eastern North Carolina.”

Smithfield operates one of the largest slaughterhouses in the world in the Bladen County town of Tar Heel, employing about 5,000 people.

Sullivan acknowledged that he is “extremely disappointed” over the lawsuits, which he believes “were spawned by out-of-state ambulance-chasing lawyers that show up for people who have never complained before.”

“That’s what they are after,” Sullivan said. “Money.”

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Billy Kinlaw has spent a good part of his life running an insurance business in the little Bladen County town of Dublin. For the last 24 years, he also has raised hogs for Smithfield Foods.

Now pushing 80, Kinlaw is hesitant to talk publicly, because his lawyers say another trial is coming. But he is upset and angry. He said he worked at the farm 16 to 18 hours a day. He just spent $400,000 to upgrade it.

His farm, which he had planned to pass down to his children, is all but gone — possibly for good.

“It’s not a pleasant situation, and it’s hard to control yourself under these circumstances,” Kinlaw said. “Somebody takes that away from you and you haven’t done anything. That’s pretty strong.”

The same fate could await Joey Carter, a former Beulaville police chief who raises hogs for Smithfield Foods in Duplin County.

“Right now, Joey Carter is sitting in the courtroom scared for his farm,” said Andy Curliss, head of the North Carolina Pork Council.

Carter’s farm is at the forefront of the second nuisance lawsuit against Smithfield Foods. The civil trial began May 29 in front of Judge Earl Britt in U.S. District Court in Raleigh. In the first trial, lawyers for Kinlaw’s neighbors picked the case they wanted to move forward first.  In this case, Smithfield’s lawyers got to choose.

The facts in both cases are strikingly similar. A group of neighbors allege that the farms are a nuisance and that Smithfield isn’t doing enough to make the problems disappear.

The groups’ lawyers, led by Michael Kaeske of Texas, say Smithfield could resolve the biggest issue — odor — but it isn’t willing to spend the money to do so.

Smithfield counters that there is little it can do. It maintains that the best technology in North Carolina for storing and disposing hog waste remains a system of lagoons and spray fields.

Under that system, used for decades, hog waste is stored in cesspools, where it decomposes before the surface water is sprayed on adjacent farm fields. Neighbors of hog farms say the mist from the spray drifts onto their properties, coating outside walls of their homes. They have complained that living next to a hog farm can cause stress, respiratory problems, increased blood pressure and other ailments, and research has shown they're right.

Testimony last week illustrates the opposing views. Kaeske, representing the neighbors of Carter’s farm, continually sought answers as to why Smithfield won’t pay for technology that he said is proven to reduce hog farm odors.

Among the technology Kaeske mentioned are lagoon covers, biodigesters and other equipment that trap methane gas and convert it to electrical power.

Tom Butler, whose Harnett County hog farm near Lillington has won awards for its environmental advances, has testified against Smithfield. Butler said in an interview Thursday that the lagoon covers and related equipment at his farm supply energy to 28 homes, and he hopes to someday power 122 more.

Butler acknowledged that, in the early days, his farm stunk. He said it still produces odor from its spray fields. But the lagoon covers, he said, have made his neighbors a lot happier.

“When we installed the covers, they told us it was like the farm went away,” Butler said.

Kaeske said in court that Smithfield could outfit its growers' 2,000 lagoons in North Carolina with covers and equipment for about $500 million. He noted for the jury that Smithfield earned $923 million after taxes last year, while its Chinese parent company, the WH Group, earned $1.5 billion.

Kaeske also noted that the attorney general of Missouri ordered lagoon covers to be used at all hog farms in that state to control odors.

On the witness stand Wednesday was Gregg Schmidt, Smithfield’s president of hog operations. Schmidt testified that lagoon covers may offer a “slight improvement” in odor control, but he questioned their overall value. He said covers work better in Missouri because the cooler climate causes bacteria to behave differently. He added that covers also create the need for expanded spray fields because the concentration of nitrogen increases.

“There is not a technology in North Carolina that performs better than a lagoon and spray field,” Schmidt testified more than once.

That has long been the underlying debate for an agricultural commodity with razor-thin profit margins.

“If we can’t grow a hog as competitively as our competitors, then the competitors will grow all the hogs,” Schmidt said.

Sullivan, Smithfield’s CEO, said that although the company has turned an overall profit, it has lost money six of the last eight years on its hog operations.

“We’re getting killed on these hog farms,” he said. “The idea is we have plenty of money to fix it. We don’t in hogs.”

In 1999, Smithfield entered an agreement with the state in which it agreed to pay $15 million for scientific research to develop technology that, among other things, would significantly reduce odors from farms.

Smithfield agreed to use the technology on its farms if it proved to significantly reduce odors and was economically practical. Years later, researchers agreed that certain technology could get the hog farms past the smell test. It was the economic hurdle that’s still in question.

Will Hendrick, a staff attorney for the environmental group Waterkeeper Alliance in Chapel Hill, is among those who believe Smithfield should pay to stop the odors and other ills.

“There is no question that technology exists that can treat and better manage swine waste,” said Hendrick, who is the manager of the North Carolina Pure Farms, Pure Waters Campaign. “The reality is they just have been reluctant to do what’s necessary.”

•••

A soft rain fell one day last week outside Billy Kinlaw’s farm on Pearl Lloyd Road near White Oak. There was no smell of hogs on that day. No infestation of flies, either.

Kinlaw’s neighbors, the people who filed the lawsuit, wouldn’t talk about the verdict, which Smithfield is appealing. Person after person politely dismissed a reporter who had knocked on their doors.

The only person on the road who would talk was Nolana Redburn, who has lived in a trailer at the entrance to the farm for more than five years. Her fiance, Bartolo Del Balle, works for Kinlaw.

“It don’t bother me at all,” Redburn said. “It’s not a constant smell. It’s not every day. It’s no big deal to me. That horse farm smells just as bad to me.”

Redburn was referring to the Butler Farms Training Center, where owner Ted Carson trains Arabian horses on a large expanse that abuts Kinlaw’s property. Carson testified for Smithfield in the first trial.

Carson said he has no dog in the fight, and his neighbors might have different issues because of the truck traffic. He estimated that the smell from Kinlaw’s farm gets bad about 15 times a year, depending on the temperature, wind direction and other factors.

“It just has not affected me in any realm,” Carson said. “Do we smell hogs? Yes. Do they smell bad? Yes. Does it happen very often? No.″

That’s the other big issue being fought in court. Just how bad is it living next to a commercial hog farm?

Smithfield’s lawyers argue that the plaintiffs’ claims are greatly exaggerated.

They wanted jurors in the first trial to take a tour of Kinlaw’s farm and the surrounding neighborhood, but the judge said no.

“We believe the outcome would have been different if the court had allowed the jury to (1) visit the plaintiffs’ properties and the Kinlaw farm and (2) hear additional vital evidence, especially the results of our expert’s odor-monitoring tests,” Lombardo, the Smithfield executive, said in her statement.

Curliss, from the N.C. Pork Council, said there is only one motivation behind the lawsuits.

“They clearly have said that they want money,” he said. “That’s what this was all about.”

Kaeske, now the lead lawyer for the plaintiffs, owns a law firm in Austin, Texas, specializing in national commercial and personal injury lawsuits. Years before that, he worked for Baron & Budd, the Dallas law firm that is now suing Chemours in Bladen County on behalf of residents whose wells have been contaminated with GenX.

•••

A year before the lawsuit centering on Kinlaw’s farm went to trial, the Republican-controlled General Assembly passed a law limiting liability in nuisance cases for agricultural and forestry operations, including hog farms. That’s why the plaintiffs in Kinlaw’s case got about $3 million instead of the $51 million that jurors thought they deserved.

After the verdict, the General Assembly again reacted swiftly, approving a Farm Act bill on Thursday night that would severely restrict neighbors from filing future lawsuits against hog operations over nuisance complaints.

“This year’s Farm Act contains a provision to help protect farmers from predatory lawsuits which have become popular among trial lawyers looking for a quick payday, even drawing lawyers from across the country as they try to pit neighbor against neighbor in an effort to line their own pockets,” reads a statement released Friday from the bill’s co-sponsor, state Sen. Brent Jackson.

Jackson, who represents Sampson, Duplin and Johnston counties, is a Republican farmer who receives strong financial backing from Smithfield and associated agricultural interests.

Molly Diggins, state director of the Sierra Club, has a far different view of Jackson’s legislation.

“We don’t think states should be allowed to be subject to extortion,” Diggins said. “The importance to have laws applied fairly to all citizens is certainly the primary concern.

“It’s not appropriate for the state legislature to try to put a thumb on the scale of pending legislation.”

Diggins said the legislation evolved without any efforts to address the issues in the nuisance lawsuits.

“The legislation was designed to solve Smithfield Foods’ problems, not the residents’ problems,” said Diggins, who is among those who believe technology exists to eliminate the odor problems.

North Carolina Agriculture Commissioner Steve Troxler thinks the nuisance lawsuits could set a dangerous precedent, one that threatens the economic stability of the entire state.

“Does it stop with these attorneys suing a company, or does it keep moving right on and right on and right on and farmers are sued right out of business?” Troxler said.

Troxler said hog production is an $11 billion business in North Carolina, creating more than 46,000 jobs, including the 5,000 at Smithfield’s slaughterhouse in Tar Heel.

Troxler, like others, is concerned that the outcome of the lawsuits could cause Smithfield to leave the state, even though the company just invested $100 million in its slaughterhouse.

“It would roll the streets up on some of these small towns in North Carolina if you took the hog industry out and 46,000 full-time jobs,” Troxler said.

Staff writer Greg Barnes can be reached at gbarnes@fayobserver.com or 910-486-3525.