A RECENT ruling by a federal judge in Kansas cleared the way for farmers, grain handlers and exporters to proceed toward trial in their suits against Syngenta claiming that the sale of the company's Agrisure Viptera and Agrisure Duracade genetically modified corn seed interrupted trade with China and harmed the market for U.S. corn.

The class action lawsuit alleged a total of 21 counts, including consumer fraud, tortious interference with business, negligence, nuisance and trespass to chattels.

Syngenta challenged the case, arguing that it had no post-sale control over how third parties used its products and that third-party use is what may have resulted in contamination of the corn supply chain.

However, federal U.S. district Judge John W. Lungstrum rejected Syngenta's two primary legal defenses in denying Syngenta's motion to dismiss in substantial part.

Lungstrum issued his 116-page ruling on Sept. 11, after reviewing hundreds of pages of written briefs and oral arguments presented by the plaintiffs' co-lead counsel team and Syngenta.

The counsel team, which includes Don Downing of Gray, Ritter & Graham, alleged, among other things, that Syngenta was negligent in the timing, scope and manner of commercializing Viptera and Duracade corn in the U.S. in 2013 because it knew that China had not yet approved the biotech corn variety.

China had been a major importer of U.S. corn and stopped accepting virtually all U.S. corn shipments. As a result, prices for U.S. corn were depressed, causing economic damage to U.S. corn growers and others in the industry, according to the plaintiffs.

Lungstrum rejected Syngenta's argument that it had no duty to protect the farmers, exporters and others in the industry who had brought the suit.

In his ruling, he explained that "the law reasonably imposes a duty on a manufacturer to exercise reasonable care not to commercialize and sell its product in a way that creates a risk of widespread harm resulting from the intended use of the product by all of its customers."

Based on the allegations in the complaint, the court made two other key observations. First, the court said the case "involves a risk of harm to other participants in an interconnected market — participants whom Syngenta has appeared to embrace as stakeholders and, thus, are especially vulnerable to the wrongful acts alleged by plaintiffs." Second, the court said Syngenta had actually represented that it would take steps to protect the industry from the very harm that did occur.

"This is a big win for the American corn farmer," Downing said. "We believe the court's ruling thoroughly addresses and rejects the primary legal defenses asserted by Syngenta — namely, that it had no duty to avoid conduct that it knew was likely to harm corn farmers and others and that the economic loss doctrine barred those claims."

Publicly available estimates of economic damages in early 2014 ranged from $1 billion to $2.9 billion, although Downing explained that actual damages may now be substantially higher given that U.S. corn exports to China have yet to recover.

At the University of Illinois, A. Bryan Endres, associate professor of food and agricultural law, and Lisa Schlessinger, agricultural and consumer economics post-doctoral research associate, noted that the ruling resolves, at least in part, a long-standing, open issue on the effect government product approval (i.e., biotech product deregulation) may have on subsequent claims for damages arising out of the use of the product.

"Although one should be cautious in reading too much into this preliminary result, it nonetheless establishes an important benchmark in the developing common law of biotechnology in the U.S.," they said.

While some claims will move forward, a Syngenta representative told Feedstuffs that it is important to note that the court dismissed a number of claims in the ruling. Syngenta prevailed in its effort to dismiss claims regarding failure to warn, trespass to chattels, private nuisance and several other statutory claims.

"We are pleased that the court dismissed a number of the claims in the Viptera China litigation," the representative said. "The court was legally required, at this early stage, to take the plaintiffs' allegations at face value and accordingly concluded that certain claims could go forward past the initial pleading phase. The plaintiffs will now have to prove their claims with real evidence, and we look forward to defending ourselves vigorously as the litigation proceeds."

Syngenta said it believes the lawsuits are without merit and added that it will "continue to defend the rights of American farmers to have access to safe, effective, U.S.-approved technologies like Agrisure Viptera."

The representative noted that Syngenta "commercialized Viptera in full compliance with regulatory and legal requirements, and (U.S. Department of Agriculture) statistics make clear that the commodity price of corn declined before China's rejection of U.S. corn in November 2013."

In sum, Endres and Schlessinger noted that the ruling "was just one more step on what is likely to be a long and, at times, controversial journey."

Volume:87 Issue:38