Jury finds in favor of Premium Standard Farms

The trial began on June 6. The suit alleged that odor from a PSF farm in Daviess County had created a nuisance that damaged Hanes’ use and enjoyment of his farm. Closing arguments on June 22 lasted three and one-half hours, with spectators nearly filling the courtroom.

"We are very pleased that the jury found that PSF’s Scott-Colby Farm did not create a nuisance over the 11-1/2 years covered in this lawsuit," said Bill Homann, president of PSF. "This was our first opportunity to present our story to a jury from a rural area, where residents understand how food is raised and the kinds of odors that are experienced in everyday agriculture."

According to PSF, the case is the latest in a series of cases filed by out-of-state lawyers alleging nuisance against PSF and the second time in the last three trials that a jury has found that PSF did not create a nuisance. Since 2007, two juries have now found in favor of PSF. In 2007, a Jackson County jury returned a defense verdict in a case alleging nuisance with respect to PSF’s Homan Farm in Gentry County.

PSF says that these outcomes demonstrate that their substantial efforts to address odor, involving the expenditure of $33.5 million to date, have been successful.

"We will continue to work very hard to maintain and enhance our positive impact on the state’s economic well-being, which includes providing over 1,000 direct jobs and helping create 5,000 good jobs that support Missouri farm families," Homann said.

The Daviess County case just decided was filed on April 14, 2008, listing Vernon Hanes and the Vernon Lee Hanes revocable trust as plaintiffs. Defendants were Smithfield Foods, Premium Standard Farms, Contigroup Companies, PSF Group Holdings Inc., and KC2 Real Estate LLC. The change of venue to DeKalb County was granted July 29, 2008.

The case was heard by the Honorable Jon Beetem from Cole County. Kansas City attorney Charles Speer was listed as lead counsel for Hanes, and Jean Paul Bradshaw II of Kansas City for Smithfield Foods.

According to DeKalb County Circuit Clerk Julie Whitsell, 300 potential jurors were called for the case just concluded. Last fall, 100 potential jurors were summoned; however, not enough jurors could be seated to allow the trial to take place.

Daviess County has borne the cost of the case, as the originating county is responsible for court costs. Daviess County has already paid the jury expense for last fall and is accountable for this month’s trial expenses; however, Hanes will now be responsible to pay for the trial expenses.

Closing Arguments for Vernon Hanes
presented by Richard Middleton of Speer Law Firm

During closing arguments, Richard Middleton as counsel for Hanes asserted that PSF had shown reckless disregard for the personal rights of Mr. Hanes and had intentionally chosen to change the nature of the farmland by developing operations too large for the amount of land acquired.

The plaintiff’s attorney also said that the hog population at Scott-Colby Farm was above the number that the facilities were designed to handle. Middleton compared this operation to those in North Carolina and Iowa where less than half of the hog farms have been found to be a menace to neighbors. He said that these PSF farms are the largest hog operations to be found anywhere, and that "if you’re going to be the largest, it comes with the price (of accountability)."

Mr. Middleton said that PSF produced 58 million gallons of waste a year and that 1,000-1,200 dead hogs were disposed of each week. He also made the point that Continental Grain wanted to swap land with Mr. Hanes in 1993, so that he would be away from prevailing winds. Hanes turned them down, saying it was not a good offer.

The plaintiffs criticized the methodology and protocol used to measure odor, including the nasal ranger which is used by sniffers to determine the amount of hog odor present at designated locations and designated times. Middleton said the best instrument for judging odor is the human nose.

Middleton emphasized that all Mr. Hanes knew was farming and that he had built his life there on the farm.

Closing Arguments for PSF
presented by Samuel Tarry of Lathrop-Gage Law Firm

PSF’s counsel Samuel Tarry asked the jury to consider if PSF actions were reasonable … not perfect, but reasonable. Mr. Hanes claimed that only token efforts were made by PSF to correct the problem, but the defense described the extensive measures that PSF has taken to address odor, and said that a nuisance lawsuit must prove substantial impairment to the property owner.

Tarry said that no evidence had been presented which showed that there had been an overpopulation of hogs. He added that Hanes had purchased 304 acres after the operation on the Scott Colby farm was established. It should be expected that the land closest to the hog farm would be affected by odor, and Mr. Hanes made the choice to obtain land which was closest to the source.

The defense demonstrated through testimony that PSF land applications have saved money for PSF neighbors by reducing their fertilizer costs.

Tarry addressed Hanes’ claims about his health issues and asserted that the claims were unverified by doctors. He said that Hanes attributes his loss of smell to the presence of the hog farms, yet no hog farm employees have suffered from that problem. The defense also asserted that age (Hanes is 76) and smoking also have an effect on health which cannot be discounted.

Mr. Hanes moved to Lake Viking in 2001 and had testified that doctors had told him he would die if he didn’t move. Mr. Hanes’ grandson and his family moved to the farm in 2009 and reside there today.

The defense presented a series of video clips of Mr. Hanes’ testimony in which he gave his opinion of various people and government agencies, in an effort to show that Mr. Hanes will not accept the validity of a report or professional opinion if the conclusion is not what he wants to hear.

Tarry closed by stating that Mr. Hanes is a highly successful farmer, who owns 3,000 acres. His CRP payments, rental income and crops have not been reduced. He said Hanes should be proud because his farm is thriving, but asserted that PSF is not to blame for his health problems and that PSF had taken extensive measures to address his complaints.

No more repeated nuisance claims

This will be among the last instances where one plaintiff attempts to repeatedly seek damages for the same nuisance.

Earlier this spring, Missouri lawmakers and Governor Jay Nixon passed HB-209, a bill that limits nuisance lawsuits against agricultural operations. The law covers all farms big and small. House sponsor of the bill, Casey Guernsey of Bethany, pushed the bill to protect PSF from facing repeated lawsuits from neighbors.

The bill mandates that property owners who sue nearby farms over odors may be awarded only the market value of their property, and that they cannot sue malodorous neighbors repeatedly for the same nuisance. The bill was supported by the Missouri Farm Bureau, and both Rep. Guernsey (3^rd District) and Senator Brad Lager (12^th District) were actively involved in the legislative process on this issue.

Mr. Hanes was awarded $100,000 in May 1999 by a St. Louis jury in a class action suit against Continental Grain Company, which owned Premium Standard Farms at the time. Out of 108 total plaintiffs, 52 families in Daviess, Gentry, Grundy and Worth Counties received $100,000 in the $5.2 million award.

The case was one of the first in the nation where farmers and rural residents held a corporate hog operation accountable for degradation of property values and quality of life issues. No punitive damages were awarded.

Fourteen of the plaintiffs who received $100,000 in the above case were also plaintiffs against Premium Standard Farms when a Jackson County jury awarded $11 million to 15 plaintiffs in 2010. Although the case was appealed, the court ruled recently that the plaintiffs will keep the award. In this case, PSF (parent company Smithfield Foods, the world’s largest pork producer) focused a large part of its argument on the question of property value versus the damage to quality of life. The company said that any award significantly exceeding the total value of the property is grossly excessive. Hanes was not a plaintiff and has no other cases pending against PSF.

What’s ahead?

In a pending case of similar nature in Daviess County, Jack Arnold, Carlotta Arnold (since deceased), and David Gwinn of Jamesport filed against Smithfield Foods et al in April 2010. Each of these plaintiffs received $750,000 in a successful bid for damages heard in Jackson County in 2006. Charles Speer of Kansas City is the attorney for the plaintiffs in both the completed case and the pending case.

In a phone interview, Mr. Speer did not have a guess as to when the Arnold-Gwinn case would come to trial. Although his firm has other cases pending throughout north Missouri, none have been set at this time.

In a previous interview, Mr. Speer said that his firm has hundreds of lawsuits pending in seven states against PSF and others in the industry. His firm is currently representing plaintiffs in more than 200 cases against PSF in Missouri.

In regards to the recent defense verdict in Maysville, Mr. Speer commented that each case depends on the individual facts. He said the outcome of the recent Hanes trial does not have any application to his firm’s remaining pending cases.

Smithfield and PSF are represented by Jean Paul Bradshaw of Lathrop Gage Law Firm in the Arnold-Gwinn case. According to Mr. Bradshaw, there are still claims from the Scott-Colby farm that are pending in Jackson County, a case that originally had 60 plaintiffs and concerned three different PSF farms – two in Gentry County (Homan and Ruckman farms) and one in Daviess County (Scott-Colby farm).

One Homan farm case got a defense verdict in 2007, but the second Homan case in 2010 resulted in a verdict of $11 million for 15 plaintiffs. There is one Scott-Colby case pending. Although it was set for August, a recent change in judge probably means that the case will not be tried before next spring. Mr. Speer is the attorney for the 25 plaintiffs.

Other cases which originated in Putnam, Sullivan, Mercer, Daviess, Harrison, Grundy and Linn Counties are pending in Linn, Chariton, DeKalb, Clark and Harrison Counties due to changes of venue requested by the plaintiffs.

A recent University of Missouri study found that PSF and its related company, Kansas City-based Farmland Foods, Inc., provide an economic benefit in excess of $1 billion to the state’s economy.