In the ongoing controversy over a series of nuisance suits regarding eastern North Carolinian hog-farming operations, a collection of advocacy groups have now filed a constitutional challenge to the North Carolina General Assembly’s recent amendments to the Right to Farm Act (the “Act”) (detailed here) in Wake County Superior Court. Rural Empowerment Ass’n for Cmty. Help v. State, No. 19-CVS-008198 (N.C. Super. Ct. filed June 19, 2019).

The amendments to the Act protect North Carolinian agricultural and forestry industries operating in good faith. The statutory scheme’s text is broadly applicable to any agricultural or forestry operation that allegedly results in a nuisance and restricts punitive damages to those instances where the federal or state executive branches bring enforcement (civil or criminal) actions against the operation. N.C. Gen. Stat. §§ 106-701 to -702 (2018). The plaintiffs construe the 2017 and 2018 amendments as specifically and intentionally denying the recovery of punitive damages in the ongoing nuisance suits in violation of the North Carolinian (but not the Federal) Constitution.

Although the statutory text itself does not mention the ongoing nuisance suits, the plaintiffs argue that other legislative evidence indicates the true purpose of the statute, namely limiting plaintiffs’ recovery in the nuisance suits. Specifically, the plaintiffs rely on legislative floor discussions and the 2018 amendment’s statement that its passage was prompted by a recent federal trial court’s misinterpretation of North Carolina’s statutory nuisance scheme. According to the complaint, this violates North Carolina’s constitutional prohibition on “special act[s] or resolution[s] . . . relating to health, sanitation, and the abatement of nuisances,” along with North Carolina’s “law of the land” constitutional provision (comparable to the federal Due Process clause), and the constitutional guarantee of a jury trial.

This is not the first challenge to the constitutionality of limits on punitive damages in North Carolina. In Rhyne v. K-Mart Corp., the state’s Supreme Court analyzed whether the statutory cap on punitive damages to three times the compensatory damages awarded or $250,000 was constitutional. 358 N.C. 160, 594 S.E.2d 1 (2004), aff’g 149 N.C. App. 672, 562 S.E.2d 82 (2002). The plaintiffs in Rhyne brought a number of challenges similar to the plaintiffs here (e.g., law of the land challenge and right to jury trial challenge). The Rhyne court, among other things, upheld the punitive-damages cap, finding that it was a “modification of the common law within the General Assembly’s policy-making authority to define legally cognizable remedies” and that the General Assembly actually had “the power to abolish the recovery of punitive damages” in certain tort actions “because, unlike actual or compensatory damages, plaintiffs [have] no right to the recovery of those damages.” Id. at 170–71, 594 S.E.2d at 9.

This lawsuit threatens the stability of the state’s agricultural industry. Even beyond discussion of the common law and vested rights, the state government’s ability to control punitive damages plays an important role in economic growth. Although punitive damages can serve public policy by “punish[ing] intentional wrongdoing,” Rhyne, 358 N.C. at 166, 594 S.E.2d at 6, they can also be awarded with seemingly no consistency against parties engaging in similar behavior but whom juries fail to treat similarly. Theodore B. Olson, The Parasitic Destruction of America’s Civil Justice System, 47 SMU L. Rev. 359, 366 (1994) (“Punitive damages combine the worst elements of a lottery and a plague by combining little rhyme or reason for who is rewarded and who is punished.”). Such risk can often discourage entrepreneurs from entering in to industries that are prone to frivolous lawsuits, yet are still essential to a state’s economic growth, like extensive agricultural operations. Olson, supra, at 366 (“Because punitive damages are so freakish, capricious, and lottery-like, they discourage the responsible entrepreneur.”). The amendments to the Right to Farm Act, in limiting punitive damages, allow business entities involved in agricultural operations to conduct themselves accordingly, knowing the amount of risk they face by entering into an important state industry like hog-farming.

Plaintiffs’ legal theories have tenuous legal support, but, if accepted, could potentially threaten the day-to-day operations of many agricultural and forestry operations, as will be detailed in a follow-up post.

Sean Placey is a summer associate in the firm’s Greensboro office.