Attorneys Suing Murphy-Brown Say the Punitive Damages Cap is Unconstitutional | News
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Thursday, May 3, 2018

Attorneys Suing Murphy-Brown Say the Punitive Damages Cap is Unconstitutional

Posted by on Thu, May 3, 2018 at 11:57 AM

Attorneys suing the pork giant Murphy-Brown LLC say a punitive damages cap that would significantly reduce the amount the company has to pay plaintiffs is unconstitutional, according to court documents filed yesterday.

The argument to impose the punitive damages cap came last week after a jury handed down a landmark verdict of more than $50 million to ten plaintiffs suing Murphy-Brown, a subsidiary of the global food behemoth Smithfield Foods. The case was one of a string of federal lawsuits filed against the company and was closely watched as a potential bellwether. Should other juries follow suit, Murphy-Brown could be hit with millions—and perhaps billions—in additional damages, a harsh rebuke of the world's largest pork producer (you can read more about the trial here).

With a potentially catastrophic payout looming, Murphy-Brown immediately vowed to appeal the verdict, calling the lawsuits "an outrageous attack on animal agriculture." The company also pointed to a decades-old North Carolina law that could bring down the total judgment in the case by millions. That law, passed in 1995 and upheld by the state Supreme Court in 2004, stipulates that punitive damages must be limited to three times the amount of compensatory damages or $250,000, whichever is greater.

Here's how that would play out. In last week's case, the jury awarded each plaintiff $75,000 in compensatory damages and $5 million in punitive damages. If the punitive damages cap holds up in court, that means that each plaintiff would be limited to an award of $325,000, bringing the total judgment down from $50.75 million to $3.25 million. For a company like Smithfield, whose Chinese parent firm made $2 billion in profits last year, that's far from the sort of crippling financial penalty that critics were hoping would spook the company out of doing business as usual. In practical terms, that means that the reduced penalty probably wouldn't deter Smithfield from continuing to operate the lagoon-to-sprayfield model of waste management, which critics have long argued is the cheapest option available.

But the legal team suing Murphy-Brown is making the case that the punitive damages cap as it applies to the verdict is unconstitutional. Although the North Carolina Supreme Court upheld the law in 2004 in Rhyne v. K-Mart Corp, the plaintiffs argue that that the Rhyne holding, which involved a personal injury case, does not apply in this particular case—which involves nuisance claims—and the court, therefore, should not apply the cap. (In a separate filing yesterday, Murphy-Brown submitted a motion to impose the cap).

To make their case, the plaintiffs are going all the way back to the 1800s. As the motion argues:
The North Carolina Constitution when first enacted in the late 1700s, and when reconstituted in 1868, affords a very particular protection to property rights. The framers viewed the right to a trial by jury without impairment or negation as so important as to be termed “inviolable” and “sacred.”

Plaintiffs are aware of no case in North Carolina addressing the specific issue of whether application of the cap violates the constitutional rights of the Plaintiffs where:
  • Defendant seeks to apply it to significantly cut a punitive damages verdict arrived at by a unanimous jury following by-the-book pattern jury instructions,
  • The verdict came in a private recurrent nuisance case,
  • North Carolina has a state constitutional provision which singles out the right to a jury trial as “sacred” and “inviolable” in “controversies respecting property,”
  • Older reported cases reflect the use of a jury trial in a nuisance case and note the availability of exemplary damages under certain facts,
  • Plaintiffs’ interest in their nuisance property-related claim extends to include an interest in the deterrent effect of a punitive damages award on a Defendant that (according to them) continues to cause nuisance condition to occur, and
  • Where the award, without application the cap, would still be subject to ordinary Court due process review and, if necessary, reduction, thus protecting the Defendant from inequity.

In other words, the attorneys suing Murphy-Brown argue that this case is distinguishable from the case decided by the state Supreme Court because it involves property-related nuisance claims, not personal injury (the plaintiffs say Murphy-Brown's handling of waste has infringed on their property rights), and under the 1868 constitution, the plaintiffs have a "sacred and inviolable" right to a jury.

If that's the case, they argue, then applying the punitive damages cap violates that sacred right: "Under the circumstances, applying the state law cap on the punitive damages remedy impairs the rights of the Plaintiffs to a trial by jury on all issues so triable– as requested in the jury demand."

"Plaintiffs do not contend their claim for punitive damages, standing alone, is a property right the legislature cannot take away. However, they do contend that their underlying claim for private nuisance is a controversy respecting property; and that under the circumstances, the right to a jury trial and to determination of the issues by a jury extends to include the entire controversy– including the allegations and evidence of longstanding, willful and reprehensible conduct, and to the request both for compensatory and punitive damages."

What's more, they argue, all of the plaintiffs involved in the case are African-American, and many can trace their land back to Reconstruction—to the principle of 40 acres and a mule—representing a profound ancestral right entitled to the full protection of the jury system. Whether the court will buy that argument is another question entirely, as the law was upheld by the highest court in the state fourteen years ago.

As INDY explained in this week’s paper, the bill capping punitive damages was introduced in 1994 by Republican state representative Charles Neely and was pushed by the N.C. Citizens for Business and Industry, a coalition of the state's largest companies. As a lobbyist explained at the time, the bill was aimed at preventing "frivolous lawsuits that are intended to frighten businesses" into settling—in other words, to protect corporations from exactly the kind of massive payouts the jury meted out to Smithfield last week.

The plaintiffs, in their brief, point to an article published when the bill was introduced that links the legislation to the commercial hog farming industry. The article, an editorial in the Wilmington Morning Star in July 1995, noted that the bill would "take the sting" out of the threat of a lawsuit over a hog waste spill the previous month: "Just as the victims of hog waste spills may need help from the courts, the legislature seems ready to make it harder to get that help," they wrote. "That's not right."

As the court considers legal arguments in favor of and opposed to the damages cap, prominent political figures are weighing in on the verdict. Earlier this week, according to the Food and Environmental Reporting Network, U.S. Agriculture Secretary Sonny Perdue called the verdict "despicable. It's horrible if that's the kind of money that people are awarding."

Meanwhile, U.S. Senator Cory Booker, a New Jersey Democrat who has been outspoken about commercial hog farming in North Carolina, told the INDY in a statement that the ruling was "a huge victory for the residents of Bladen County and all Americans who believe that clean air and water is a basic human right."

"For too long, corporations have been able to place the costs of doing business – in this case, the many costs associated with noxious waste produced by more than 10,000 hogs – on the backs of low-income communities and communities of color, polluting the air, water, and soil and making kids and families sick while reaping large financial rewards. This ruling sends a clear message that this horrific practice is unacceptable, and that corporations need to do right by the communities they impact.”


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