By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
A San Francisco jury found last Tuesday that Roundup – the glyphosate-based weedkiller – was “a substantial cause “ of the plaintiff Edwin Hardeman’s non-Hodgkin’s lymphoma, in the first of a three-phrase process, which focused only on scientific evidence.
Roundup is the largest selling herbicide in the world, originally developed and marketed by US agricultural company Monsanto. Following a $63 billion acquisition last June, Bayer, the German pharmaceuticals company better known for its aspirin, also assumed the Roundup legal liability.
On Wednesday, the same jury began the second trial phase, during which it will decide whether Bayer is liable. If the jury decides yes, the third and final phase would determine damages.
This is the second time since last August that a jury has found in favour of a Roundup plaintiff, according to the Wall Street Journal’s account, Monsanto Hit by $289 Million Verdict in Cancer Case. A judge scaled back the jury damages award to $78 million from $289 million; that earlier verdict is under appeal.
At least 11,200 further legal claims are pending – more than 760 in the same San Francisco federal district court that heard Hardeman’s case, as reported in U.S. Jury Hears More Evidence as Second Phase of Roundup Cancer Trial Begins by the New York Times.
Bayer’s Legal Tactics
The Grey Lady’s coverage warns that this second verdict is a serious setback to the new trial strategy Bayer had adopted for the second proceeding in Jury Finding Upends Bayer’s Roundup Defense Strategy: Experts:
Bayer AG had hoped a new trial strategy focusing jurors on scientific evidence could stem a burgeoning tide of U.S. lawsuits over its glyphosate-based weed killer Roundup, but a second jury finding on Tuesday that the product caused cancer has narrowed the company’s options, some legal experts said.
The jury decision was a blow to Bayer after the judge in the Hardeman case, at the company’s request, had split the trial, severely limiting evidence plaintiffs could present in the first phase. Tuesday’s defeat on terms considered advantageous to Bayer sets up the second phase to be even tougher and limits the grounds on which the company could appeal any final verdict, the experts said.
“The fact that Bayer lost this trial despite it being set up in the most favorable way for them is a huge setback,” said Thomas Rohback, a Connecticut-based defense lawyer.
The Hardeman trial isn’t yet over. The NYT account examines some of the relevant issues more fully, and I won’t repeat all that analysis here. A key takeaway:
Bayer’s new strategy was focused on keeping out plaintiffs’ allegations that the company improperly influenced scientists, regulators and the public about the safety of Roundup. Bayer has denied it acted inappropriately and said in public statements following the August verdict that it thought the jury was inflamed by the claims of corporate misconduct.
Vince Chhabria, the San Francisco federal judge overseeing the Hardeman case, agreed with the company’s argument that such evidence was a “distraction” from the scientific question of whether glyphosate causes cancer. He agreed to split the trial in a January order.
Had Bayer had won the first phase, there would have been no second phase looking at company liability. Now that it has lost, almost all of the previously excluded evidence can be presented to the jury.
On Wednesday when the second phase of the trial began that’s exactly what the plaintiff’s attorneys did, emphasizing, according to the NYT account:
Monsanto influenced the science around Roundup through its “cozy” relationship with regulators.
Bayer could convince the jury in the second phase that, despite their finding that Roundup played a substantial role in Hardeman’s cancer, the company was not liable. Experts said that was unlikely.
Scope of Bayer’s Liability
Just as one swallow does not a summer make, so it’s too early to call a trend based on these two verdicts. The second action continues, and not only has Bayer not yet been found liable, but no damages have been awarded. Nor has the appeals processs even begun, let alone been exhausted.
So it is premature, to say the least, to attempt to calculate what potential legal liability Bayer may face. Six further Roundup cases are docketed for trial this year. The two pro-plaintiff rulings may prod other potential plaintiffs into bringing actions.
But Mr. Market is seriously reassessing the wisdom of Bayer’s decision to acquire Monsanto.
Last Wednesday, following announcement of the Hardeman verdict, Bayer’s shares plummeted by nearly 10%; the share price has declined a total of 35% since last August’s verdict, according to a report in the Wall Street Journal, Bayer Shares Fall After Jury Finds Exposure to Roundup Helped Trigger Cancer.
And today, the NYT reported in Bayer CEO Says His Team Retains Backing of Supervisory Board-Report:
Bayer’s management retains the backing of its supervisory board, its chief executive said, after pressure on the company increased when a second jury in the United States ruled its glyphosate-based Roundup weed killer caused cancer.
Today’s NYT account picks up on a report in the German press:
“The share price is significantly impacted by the legal cases related to glyphosate in America, the discounts are greatly exaggerated,” Chief Executive Werner Baumann told Frankfurter Allgemeine Sonntagszeitung (FAS).
“The management board enjoys the full backing of the supervisory board,” added Baumann, who has been Bayer CEO for almost three years.
As to the wisdom of acquiring Monsanto:
Baumann defended Bayer’s move to acquire Monsanto, saying it “was and is a good idea”, according to the FAS interview.
Asked about a potential breakup of Bayer, Baumann said the group had a clear strategy based on three divisions — pharmaceuticals, crop science and consumer health.
Talk of a break-up has been fuelled since it emerged in December that activist fund Elliott had taken a stake.
Los Angeles County Stops Roundup Use
In the wake of these two jury verdicts, the Los Angeles County Board of Supervisors has stopped the use of Roundup by county departments, according to this NBC News Los Angeles report, LA County Halts Use of Popular Weed Killer on County Property.
Supervisor Kathryn Barger recommended the moratorium on glyphosate — a main ingredient in the herbicide brand Roundup.
“I am asking county departments to stop the use of this herbicide until public health and environmental professionals can determine if it’s safe for further use in L.A. County and explore alternative methods for vegetation management,” Barger said.
The motion to impose the moratorium, co-authored by Supervisor Sheila Kueh, also cited “a growing body of scientific study” questioning the of safety of the herbicide:
“In a 2015 study led by 17 experts from 11 countries, the World Health Organization’s International Agency for Research on Cancer concluded that glyphosate should be classified as ‘probably carcinogenic to humans,'” Kuehl said. “That conclusion makes it imperative that we question any long-term use of this controversial herbicide, and that’s exactly what this motion calls for.”
The US Environmental Protection Agency in 2017 concluded that the weedkiller is not likely to cause cancer in humans, according to NBC. California does not agree and sought instead – unsuccessfully – to get the maker to label Roundup with a warning.
Skepticism over the WHO position is not confined to the US. In December 2017, the European Food Safety Organization renewed approval for the use of glyphosate, for a further five years, according to Europa.
The waters are very muddy here, and it will take some time for some of this to clear.
For the time being, the WSJ ran a happy clappy piece, suggesting farmers have yet to abandon the product, Despite Rulings, Farmers Remain Loyal to Bayer’s Roundup:
The chemical, used on the vast majority of corn, soybean and cotton acres planted in the U.S., remains prized by farmers for its low cost and effectiveness.
“I don’t have any concerns with safety,” said Danny Murphy, who raises soybeans and corn near Canton, Miss. Mr. Murphy on Wednesday was preparing to apply glyphosate to his soybean fields after a bout of wet weather over the past week delayed his work.
The Bottom Line
Roundup plaintiffs are just beginning to get their days in court. Bayer will need to expend significant money defending against these lawsuits.
In the meantime, entities such as LA County are likely to abandon use of Roundup.
And a tetchy Mr. Market may be unwilling to wait and see whether courts ultimately accept Bayer’s position that Roundup doesn’t cause cancer.