Bayer announced Wednesday a series of agreements that will substantially resolve major outstanding litigation involving Monsanto, including U.S. Roundup product liability litigation, dicamba drift litigation and polychlorinated biphenyls (PCBs) water litigation.
Werner Baumann, chief executive officer of Bayer, said the agreement brings an end to the uncertainty for customers, investors, stakeholders and employees but contains no admission of liability or wrongdoing. Baumann expressed a general feeling of relief but also acknowledged that the settlement will require a lot of money for a product that was determined to be safe.
“The most important thing now that we can do is set the course for the future and leave the uncertainty and litigation behind us,” Baumann said. During the COVID-19 lockdown, the only things open were pharmacies, hospitals and food stores, which represents the most basic consumer needs. “These are the businesses we’re in and now where we’ll put all of our energy,” he said.
William Dodero, global head litigation of Bayer, said the agreement keeps open the legal argument for pending cases and the scientific argument establishing that the product is not carcinogenic through the establishment of a scientific panel to determine any causal link between Roundup use and non-Hodgkin’s lymphoma (NHL). It also allows closure, in due course, of all pending cases if the panel determines that there is no causal link.
The company said it will make a total payment of $10.1-10.9 billion to resolve current and address potential future Roundup litigation and it also resolved dicamba drift litigation for a payment of up to $400 million and most PCB water litigation exposure for a payment of approximately $820 million. The funding is sourced from free cash flow and the animal health divestment, the company said. Baumann added that the animal health divestures should close in the next week.
Payments are expected to start in 2020. Bayer currently assumes that the potential cash outflow will not exceed $5 billion in 2020 and $5 billion in 2021; the remaining balance would be paid in 2022 or thereafter.
The main feature is the U.S. Roundup resolution that will bring closure to approximately 75% of the current Roundup litigation involving approximately 125,000 filed and unfiled claims overall. The resolved claims include all plaintiff law firms leading the Roundup federal multi-district litigation or the California bellwether cases and those representing approximately 95% of the cases currently set for trial, and they establish key values and parameters to guide the resolution of the remainder of the claims as negotiations advance.
The resolution also puts in place a mechanism to resolve potential future claims efficiently. The company will make a payment of $8.8-9.6 billion to resolve the current Roundup litigation, including an allowance expected to cover unresolved claims, and $1.25 billion to support a separate class agreement to address potential future litigation.
The Roundup class agreement will be subject to approval by Judge Vince Chhabria of the U.S. District Court for the Northern District of California. The resolutions were approved unanimously by Bayer’s board of management and supervisory board with input from its Special Litigation Committee.
The three cases that have gone to trial – Johnson, Hardeman and Pilliod – will continue through the appeals process and are not covered by the settlement. Bayer said it is important for the company to continue these cases as the appeals will provide legal guidance going forward. In an appellate court filing, the U.S. government expressed its specific support for the company’s pre-emption arguments, asserting that state law warning claims in the Roundup litigation conflict with U.S. federal law, which require no cancer warning, and must be dismissed. Just this week, a federal judge in California found that the weight of scientific evidence does not support the state’s Proposition 65 cancer warning requirement for glyphosate-based herbicides -- a ruling that reinforces the very arguments the company has made at trial, Bayer said.
The company said before deciding to settle, it considered the alternative course of continuing to litigate Roundup cases. In the company’s risk assessment, potential negative outcomes of further litigation, including more advertising and growing numbers of plaintiffs, upwards of 20 trials per year and uncertain jury outcomes and associated reputational and business impacts, likely would substantially exceed the settlement and related costs.
“Taking account of various options, I am convinced this plan provides a comprehensive, reasonable solution to the complex, contested issues presented by this litigation,” said attorney John Beisner, a consultant to Bayer’s supervisory board and a mass tort expert who leads Skadden, Arps, Slate, Meagher & Flom LLP’s Mass Torts, Insurance & Consumer Litigation Practice Group.
Customers, including farmers and other professional users who depend on glyphosate-based herbicides for their livelihoods, will see no change in the availability of Roundup products under the Roundup agreements announced today. Meanwhile, Bayer said it remains committed to offering customers more choices and announced last year an investment of approximately €5 billion over a 10-year period to develop additional methods to manage weeds as part of an integrated approach to sustainable agriculture.
The agreement includes the establishment of a class of potential future plaintiffs and the creation of an independent Class Science Panel. The Class Science Panel will determine whether Roundup can cause NHL and, if so, at what minimum exposure levels. The three cases that have gone against Bayer have involved individuals who developed NHL.
Dodero said that the company is “very confident in the 40-plus years of strong support” for the safety of glyphosate. Since the International Agency for Research on Cancer (IARC) claimed glyphosate to be carcinogenic, no expert regulator has agreed with the IARC findings, Dodero said.
Both the class and company will be bound by the Class Science Panel’s determination on this question of general causation, taking this decision out of the jury trial setting and putting it back in the hands of expert scientists.
Dodero said with the panelists being scientists, he is confident in a science-based outcome that supports the safety of glyphosate. Contrary to the picture painted in court rooms, he expects that the panel would match “real-world evidence supporting the science of our product.”
If the Class Science Panel determines that a causal connection between Roundup and NHL is not established, class members will be barred from claiming otherwise in any future litigation against the company. The Class Science Panel’s determination is expected to take several years.
Class members will not be permitted to proceed with Roundup claims prior to the Class Science Panel’s determination and cannot seek punitive damages. The agreed funding is capped at $1.25 billion and will support research into treatment of NHL, NHL diagnostic programs in underserved areas and assistance payments to class members who develop NHL before the Class Science Panel’s determination and are eligible for assistance on a need basis during that period.
Bayer will also pay up to a total of $400 million to resolve the dicamba multi-district litigation pending in the U.S. District Court for the Eastern District of Missouri and claims for the 2015-20 crop years. Claimants will be required to provide proof of damage to crop yields and evidence that it was due to dicamba in order to collect. The company expects a contribution from its co-defendant, BASF, towards this settlement.
The only dicamba drift case to go to trial – Bader Farms – is not included in this resolution. “The company believes the verdict in Bader Farms is inconsistent with the evidence and the law and will continue to pursue post-trial motions and an appeal, if necessary,” Bayer said.
Peiffer Wolf represents dozens of farmers with dicamba damage, including many that have come forward since the landmark $265 million Bader Farms verdict in February.
Producers who make a dicamba claim will be required to produce evidence of dicamba symptomology and yield loss. “It is expected that the claims process will begin later this year after the 2020 harvest has been completed,” the law firm said.
Peiffer Wolf attorney Paul Lesko, a member of the plaintiff executive committee that worked out the settlement, said: “We cannot stress enough the importance for farmers who have suffered dicamba damage to step forward and make their claim. This money will not flow out automatically. Farmers with dicamba crop damage will need to go through a process to get these funds, and we encourage them to get started now.”
Bayer said it is settling the pending dicamba drift cases to “be able to focus on the needs of its customers.”
Earlier this month, the U.S. Ninth Circuit Court of Appeals vacated registrations for three dicamba herbicides — including Monsanto/Bayer's Xtendimax — after claiming that the U.S. Environmental Protection Agency's mishandling of the registration process resulted in more than 1 million acres of crop damage in 18 states.