agriculture

Smithfield says expansion of Tar Heel facility behind closure of company’s Clayton plant

Smithfield ham (Photo: Amazon)

More than 100 Smithfield workers will lose their jobs at the company’s distribution center in Clayton, but an expansion of the Tar Heel plant, not ongoing nuisance lawsuits, are behind the facility’s closure.

Dennis Organ, senior vice president of supply chain and direct store delivery, issued a statement yesterday noting that the company has invested $100 million to expand the plant in Tar Heel, and 250 positions will be added as a result of the expansion.

Clayton employees will be offered positions at the Tar Heel operation and elsewhere, according to a company statement.

It’s unclear how many workers will transfer to Tar Heel, which is 80 miles south of Clayton.

Smithfield’s packaged meats division increased its profit this year — nearly 11 percent. But according to an August report to investors, WH Group, Smithfield’s China-based parent corporation noted that President Trump’s tariffs had dented profits in the US fresh pork segment. “Profits declined significantly due to an overabundant supply of meat in the market and trade tensions,” the report read.

Operating profit decreased by 3.8 percent in the US to $867 million, which the company attributed to inflation in wages and logistical costs.

 

 

 

 

agriculture, Courts & the Law, Environment

Appellate court ruling could funnel Smithfield agreement funds away from environmental protection

L-R Appellate Court Judges John Tyson, Phil Berger Jr, and Wanda Bryant (Photos: NC Court of Appeals)

 

 

 

 

 

 

 

 

 

 

Smithfield's payments weren't penalties, but voluntary contributions to burnish its image by working toward better waste management solutions Click To TweetFrancis X. De Luca can’t sue the state of North Carolina over an 18-year-old Smithfield agreement, the NC Court of Appeals ruled yesterday, but the former head of the conservative think tank nonetheless might have achieved his goal: To use the state constitution to siphon future settlement money away from environmental projects and toward public schools.

In a 2-1 decision, the appellate court ruled that there are legitimate questions about whether Smithfield’s annual payments constitute penalties for past bad behavior or voluntary contributions to help the environment.

Penalties go to a fund that then is disbursed to public schools. Voluntary payments can fund other projects.

De Luca and the New Hanover County Board of Education were the plaintiffs, but the court ruled De Luca does not have legal standing to sue. The decision, though, also sends the case and its core constitutional questions back to Wake County Superior Court for a new trial.

Judges John Tyson and Phil Berger Jr., were in the majority; Judge Wanda Bryant dissented.

The Smithfield agreement was a deal brokered in 2000 among then-attorney general Mike Easley, the pork producer, and its subsidiaries to compensate for the environmental damage caused by industrialized hog farms. From 1995 to 2000 waste lagoons, not all of them Smithfield’s, “had spilled millions of gallons of waste into North Carolina waterways,” according to court documents, “contaminating surface waters and killing aquatic life, while seepage from waste lagoons impacted groundwater supplies.”

Under the terms of the agreement, Smithfield pays $1 per hog it owns in North Carolina each year, up to $2 million annually. The agreement is valid through 2025. The payments, testified several officials in affidavits, were not intended as penalties for wrongdoing, but rather “voluntary contributions” that the corporation paid in order to burnish its image by “working toward better waste management solutions.” (Smithfield has not made any meaningful progress toward those solutions. That issue is central to the hog nuisance lawsuits being heard in federal district court.)

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agriculture

Gag order lifted for hog nuisance trials involving Smithfield

 

(Photo of inside hog barns from trial exhibits)

Plaintiffs and defendants involved in high-profile hog nuisance lawsuits can speak more freely to the media now that a gag order has been lifted, according to a ruling issued today by US District Court Senior Judge Earl Britt.

On June 27, during the second trial, Britt had issued a gag order prohibiting parties involved in the lawsuits, including potential witnesses, from speaking to the media unless the issues were of public record, such as scheduling of hearings and court filings. According to today’s ruling, “after considering alternate solutions, such as jury sequestration, the court issued the order to protect the integrity of the trial process.”

The reason, Britt ruled at the time, was the potential for jurors, both present and future, to be tainted by trial publicity. Earlier in June, one juror had found media coverage of the NC Farm Act, legislation that ultimately all but eliminated the right to sue hog farms for nuisance. Smithfield attorneys had moved for a mistrial, but after Britt queried the jurors, he determined that they could deliberate the case without bias.

There was extensive publicity about the trial, not just from the media but also blogs and online commentary by the NC Pork Council and NC Farm Families, which advocates for Smithfield.  The NC Department of Agriculture also held several “Stand Up for Farmers” rallies across from the Legislative Building.

From today’s ruling:

” … such publicity included press releases and information disseminated on various websites and blogs, including one registered to the subsidiary of defense counsel’s law firm; an article intimidating a potential witness through her Facebook feed; and public rallies. Further, likely as a result of the significant publicity, plaintiffs’ counsel received a direct threat by a member of the public via email, which the court referred for further investigation.”

 

Smithfield, the NC Pork Council and similar farming groups had complained that the gag order prevented them from countering criticisms lodged by environmental advocates and other parties not involved in the trial. The Reporters Committee on Freedom of the Press also opposed the order on First Amendment grounds. On Aug. 9, the plaintiffs also filed a motion asking Britt to vacate the gag order. Britt also considered the fact that the next trial is not scheduled until November.

agriculture

Despite Rep. Jimmy Dixon’s claims, Smithfield headed into mediation in hog nuisance cases

After losing three historic hog nuisance lawsuits, Smithfield Foods has agreed to enter into “alternative dispute resolution” with attorneys representing neighbors of North Carolina industrialized hog farms. In an Aug. 23 letter to Smithfield growers and employees, CEO Ken Sullivan wrote that the company will enter “concurrent mediation discussions in an effort to resolve these matters.”

This disclosure, which is more precise than the “alternative dispute resolution” mentioned in federal court documents, contradicts statements by Rep. Jimmy Dixon less than a month ago.

At a National Agriculture Roundtable earlier this month, Dixon, who is from Duplin County, the heart of hog country, proclaimed that he had entertained “special meetings with high-level officials from Smithfield. And they said they will not settle.”

Mediation proceedings are confidential. Depending on the terms, only certain details of the outcome are public. It is also possible that mediation talks could break down.

As these mediation discussions begin, attorneys for both the plaintiffs and defense have agreed to allow the first three verdicts to go to the Fourth Circuit Court of Appeals.

Appellate courts can take months, and in some cases, years to render a decision.

A gag order implemented by US District Court Judge Earl Britt limits what attorneys for Smithfield and the neighbors can say to the media. (That order is being appealed by Smithfield and the Reporters Committee for Freedom of the Press.) Ryke Longest, director of the Duke Environmental Law and Policy, is not involved in the lawsuit. He said he interpreted the letter to mean that “the parties have agreed it’s more productive to let the appeals go forward, to discuss mediation and continue the trial schedule.” It would also be very difficult for attorneys to prepare for future district court trials while simultaneously heading to the appellate court in Virginia — and entering mediation.

The fourth hog nuisance trial, originally scheduled for next week, has been postponed until mid-November. This case involving Sholar Farms in Duplin County, could be pivotal in that there is no “family farmer” for Smithfield to hide behind. Sholar is owned by Smithfield and operated by company employees — not contract growers.

In the previous trials, Smithfield owned the hogs, but the individual contract growers owned and operated the farm. Although Smithfield has always been the defendant, the company has repeatedly said that its contract farmers would be hurt by its legal losses. That is true, but by choice. Smithfield has elected to “depopulate” or withdraw its pigs from the farms rather than take steps to upgrade its waste systems.

Smithfield lost the first three cases, in which the juries awarded neighbors of the industrialized hog farms not only compensation for the harm to their quality of life, but also historic sums in punitive damages, whose totals ranged from $25 million to $475 million. Juries can award punitive damages if they believe a company has acted with malice or disregard for the plaintiffs, although the amount is capped in North Carolina. If the verdicts are sustained on appeal, the neighbors will receive from $315,000 to $15 million each, depending on the case.

Sullivan’s letter goes on to say that the company “looks forward to proceeding to the Fourth Circuit and finding ways to move forward so we can return our full attention to providing good food to millions of people around the world. Responsibly.”

 

agriculture

Fact-checking the allegations lodged about hog farms at the National Ag Leaders Roundtable

Sen. Thom Tillis (right) said that trial lawyers “must be stopped.” Tillis, Agriculture Commissioner Steve Troxler (left) and US Rep. David Rouzer (behind Tillis) led a national roundtable in Raleigh defending Smithfield Foods from hog nuisance lawsuits. (Photo: Lisa Sorg)

The language was bellicose, the atmosphere hostile. The statements, sometimes hypocritical.

With less than 24 hours’ public notice, US Rep. David Rouzer convened a “National Agriculture Leaders Roundtable” at the state fairgrounds on Friday morning. To a room packed with contract swine growers, representatives from the USDA, farming interest groups and state elected officials — including several from out-of-state — blamed Smithfield’s continued legal defeats on the media, environmentalists, lawyers and “biased” US District Court Judge Earl Britt.

“We need to change the statutes and stop [the trial lawyers] from spreading like cancer in the country,” said Sen. Thom Tillis, among whose main campaign contributors is McGuireWoods, the firm defending Smithfield in the nuisance suits. “I hope we can put them out of a job.”

Putting trial lawyers in the unemployment line, though, could hurt one of Rouzer’s main campaign contributors: the political action committee of Rountree and Losee, whose website boasts that the firm’s “litigation attorneys are true trial lawyers.”

The National Pork Producers Council, Prestage Farms and the NC Farm Bureau are also major contributors to Rouzer.

It is true that the contract growers will be hurt as Smithfield Foods continues to lose nuisance lawsuits filed against it. But the world’s largest pork producer is not being forced to pull its pigs from these farms; it is choosing to, rather than address the nuisance caused by the open-pit waste lagoons and sprayfield systems.

However, throughout the 90-minute venting session, roundtable participants lodged several allegations that were either not true or lacked context. Policy Watch factchecked the statements and is reporting their veracity here.

The gag order

Sen. Thom Tillis and Zippy Duvall, president of the American Farm Bureau Federation: Farmers are under a gag order. “We have to be a voice for them.”
Needs context: There is a gag order, but it does not apply to every hog farmer in North Carolina.
In early July, US District Court Senior Judge Early Britt issued a gag order prohibiting people associated with cases — plaintiffs’ and defense attorneys, potential witnesses, and court personnel — from speaking with the media about any information that is not part of the public record. The intent, Britt said in his order, was to avoid tainting future jury pools with “extrajudicial” information.

Greed

Sen. Tillis: “Trial lawyers are going back to their mansions and not caring [about the farmers.]”
Misleading: Presumably trial lawyers do live in nice homes, and Michael Kaeske did own a mansion in Dallas, according Dallas magazine. However, Smithfield executives are paid even more handsomely.

According to Securities and Exchange filings and company reports, Wan Long, the CEO of WH Group, the Chinese company that owns Smithfield, earned $291 million in salary and stock options last year. When C. Larry Pope retired in 2015, his payout was $25 million. He was ranked No. 86 on the Forbes list of wealthiest CEOs. In 2014, he was scheduled to earn a $46 million payout (see page 62) as part of the WH Group’s purchase of the company. Four other top executives were projected to receive a combined $54 million merger-related income. 

By comparison, many of Smithfield’s contract growers net less than $50,000 a year.

Complaints

Rep. Jimmy Dixon: “Your [Policy Watch’s] tweet that Joey Carter’s farm had a complaint is untrue.”
False: A document from 1985 showed that three Duplin County neighbors did indeed complain about Carter’s expansion of his hog farm. The lagoon, the USDA report read, would be 850 feet from one home, and 1,500 feet from 11 others. One neighbor had planned to sell residential lots on land he owned; the lagoon would be adjacent to the acreage.

“Discussed the problems that might be caused by neighbor’s complaints in future with Joey,” an entry dated March 4, 1985, reads, “but he is determined to proceed.”

On May 7, 1985, an entry reads, “Joey said he has heard that his neighbors plan to sue him for damaging their property values.” 

The jury in the second trial didn’t see this document because it had not been produced via a public records request. The defense did have the document, though, but did  not provide it until after the plaintiffs had rested their case.

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