North Carolina Federal Court Slashes Hog Farm Neighbors’ $50 Million Punitive Damages Award

Beveridge & Diamond PC

Illustrating the power of state-law caps on damages, a federal judge in North Carolina slashed a jury’s award of $5 million in punitive damages to each of ten neighbors who sued a hog farm owner for failure to properly dispose of the animals’ waste, finding that North Carolina law capped punitive damages at $250,000 for each plaintiff.  See McKiver v. Murphy-Brown LLC, Civ. No. 14-0180 BR, Order (E.D.N.C. May 7, 2018).

Plaintiff landowners sued neighboring hog farm operations, complaining that odors from open manure pits, truck traffic, and flies created a nuisance. A federal jury agreed, awarding plaintiffs a total of $750,000 in compensatory damages and $50 million in punitive damages.  In post-trial briefing on punitive damages, plaintiffs argued that North Carolina’s punitive damages cap—$250,000 or three times the compensatory award, whichever is greater—violated the North Carolina Constitution because, as applied to plaintiffs’ private nuisance claims, the cap violated plaintiffs’ right to a jury trial “[i]n all controversies at law respecting property.”  

The court rejected plaintiffs’ constitutional argument.  The court cited North Carolina Supreme Court precedent holding that “property” includes the right to sue for an injury but not the right to sue for an award of punitive damages. “[R]ecovery of punitive damages is fortuitous, as such damages are assessed solely as a means to punish the willful and wanton actions of defendants and, unlike compensatory damages, do not vest in a plaintiff upon injury.”  The court noted that the North Carolina Supreme Court applies this principle regardless of the underlying claim.

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