Monday, April 28, 2008

Smithfield Fights Odor Lawsuits

Smithfield set to fight Mo. lawsuits individually

By Lisa M. Keefe on 4/25/2008 for

Smithfield Foods Inc. has decided to litigate a series of lawsuits by residential neighbors of several of its hog farms in Missouri rather than agree to an out-of-court settlement.

In accordance with the court's direction, it will take on the cases one-by-one. The company decided to continue with litigation, after rejecting a $75 million settlement offer by plaintiff's attorneys that would have covered 31 cases brought on behalf of some 275 people.

The residents are suing over the odor produced by the hog operations. The cases originally were filed against Premium Standard Farms Inc., and Smithfield assumed the lawsuits when it bought PSF last year for $671 million.

The pros and cons of settling versus litigating are laid out in a Feb. 25 memo to Smithfield CEO C. Larry Pope by a company executive and one of its outside lawyers. The confidential memo was distributed to the company's Board of Directors in April. It inadvertently wound up in the hands of a reporter at the Kansas City Star, and is now posted on that newspaper's Web site here.

Among the company's considerations is the fact that, among three lawsuits on this issue that already had been litigated, the company had fared far better when the case concerned a single residence, rather than several residences and families, according to the memo.

Also, in fighting the cases one-by-one, the memo notes that the likely length of the litigation would be taxing on plaintiffs' counsel, although it would exact a price on Smithfield, as well, in the form of direct cost, distraction and the need to carry financial reserves related to the lawsuits.

The internal document also notes that the court could decide to aggregate the cases after all, the better to clean up the court's docket and dispose of the cases on a collective basis.

The next case on this matter is set for October. Link (subscription requried)

Modern hog operations have implemented a variety of technologies that have greatly reduced odor problems typically associated with hog production. While we don’t know the specifics of each of these lawsuits, I would imagine that some of the people that are filing these lawsuits will not be happy unless they completely shut down the operations in their area.

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