By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
Last Friday, a three-judge panel of the United State Court of Appeals for the Ninth Circuit Court upheld a $25 million judgment against Monsanto, the maker of Roundup, the world’s best-selling herbicide, of which glyphosate is the active ingredient.
This decision, Hardeman v. Monsanto, is the second appeal of a glyphosate verdict to be decided thus far and the first to be handed down by a federal appeals court (see the earlier July decision by the Court of Appeal for the State of California here).
From the summary of Hardeman opinion:
The panel affirmed the district court’s judgment in favor of Edwin Hardeman in his action alleging that Monsanto’s pesticide, Roundup, caused his non-Hodgkin’s lymphoma.
Roundup is pesticide with the active ingredient glyphosate. Since 2015, thousands of cancer victims sued Monsanto in state and federal court. This appeal arose out of the first bellwether trial for the federal cases consolidated in a multidistrict litigation. The jury awarded Hardeman $5,267.634.10 in compensatory damages, and $75 million in punitive damages. The district court reduced the punitive damages award to $20 million.
Bayer acquired Monsanto in 2018 for $63 billion, in what The Wall Street Journal has since described as one of the worst corporate deals in recent memory. Bayer assumed all Monsanto’s outstanding legal liabilities, including those related to glyphosate litigation. Bayer’s spectacular miscalculation of the value of such liabilities will be a prime topic for future study in business and law schools.
In June 2020, Bayer agreed to a $10.9 billion settlement (see my earlier post, Bayer Agrees to $10.9 Billion Glyphosate Settlement). Bayer faced liability for about 125,000 lawsuits throughout the United States. The settlement included between $8.8 billion and $9.6 billion set aside to settle claims brought by lawyers representing some 95,000 plaintiffs. For the remaining 30,000 potential glyphosate plaintiffs who had yet to file lawsuits, the original settlement included $1.25 billion to cover their claims, and a controversial provision to allow a specially-created scientific panel to decide whether glyphosate causes cancer and at what levels, thus taking that decision away from future juries. Bayer and other litigants would nonetheless be bound by the panel’s determination in future proceedings. In July the presiding federal district court judge, Vince Chhabria, disallowed the controversial provision of the settlement, and Bayer withdrew the part of its original settlement proposal that focused on future lawsuits (see my earlier post, Federal Judge Nixes Part of Glyphosate Settlement That Would Allow a Panel of Scientific “Experts”, Rather Than Juries, to Decide Whether the Chemical is Carcinogenic for Future Claims).
Bayer has since sweetened its settlement offer, setting aside $2 billion for these claims. The plaintiffs agreed to these settlement terms and this proposal is now pending before Judge Chhabria for preliminary approval (see Reply Brief Filed in Support of Motion for Preliminary Approval of Proposed Class Settlement). A hearing on this proposal is scheduled for May 19, according to Agri-Pulse, Roundup verdict of $25M upheld by federal appeals court.
What impact will the latest appellate decision have on the settlement? Some plaintiffs’ counsel will attempt to make Bayer sweeten the settlement that applies to the 30,000 potential claimants, but any change is unlikely to be significant. The parties were aware of the $25 million Hardeman judgement when they agreed to the settlement, and reached agreement in light of the uncertainty as to whether that judgment would be affirmed. The court is unlikely to pressure Bayer to pay more when the plaintiffs agreed to a settlement they deemed reasonable in light of that uncertainty. In addition, Bayer intends to appeal the Hardeman decision, according to Agri-Pulse:
The company said it will “pursue all legal options, including petitioning the U.S. Supreme Court to review this case.” Finally, Bayer said it continues “to stand strongly behind the safety of Roundup, a position supported by four decades of extensive science and the assessments of leading health regulators worldwide that support its safe use.”
Ninth Circuit Panel Decision
The three-judge panel shot down several of Monsanto’s arguments. Hardeman had made his failure to warn claim under authority of a California state statute and Monsanto argued that the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA preempted such a claim. The Environmental Protection Agency (EPA) – which has authority to allow the use of glyphosate, agreed, and filed an amicus brief in support of this position. Alas for Monsanto, the panel ruled, “FIFRA did not impliedly preempt Hardeman’s state failure-to-warn claim.” Again according to the summary:
Specifically, the panel affirmed the district court’s conclusion that Hardeman’s state failure-to-warn claims were “equivalent to” and “fully consistent with” FIFRA and therefore not expressly preempted.
This ruling “contradicts the legal position of the EPA, which argued that the pesticide registration process pre-empts lawsuits against products whose labels have been approved by the agency,” according to Capital Press, Federal law doesn’t pre-empt $25 million glyphosate verdict, 9th Circuit rules.
Further, the ruling has wider significance for the U.S. pesticide industry, as per Capital Press:
The pesticide industry, represented by Croplife America, claimed the judgment against Monsanto sets a dangerous precedent “well beyond Roundup and glyphosate.”
“The district court’s decisions under review raise the fundamental question of whether specific pesticide labeling requirements imposed by EPA in the exercise of expert scientific judgments under FIFRA can be overridden by the verdicts of lay juries under state law across a wide array of regulated pesticides,” the organization argued.
Monsanto also challenged the lower court’s decision to allow the World Health Organization’s 2015 classification of glyphosate as a probable carcinogen into evidence. This decision is significant because the EPA has not classified glyphosate as a carcinogen. From the summary of the panel’s ruling:
The panel held that the district court did not abuse its discretion in admitting the International Agency for Research on Cancer’s classification of glyphosate as probably carcinogenic and three regulatory rejections of that classification by excluding evidence from other regulatory bodies. The panel held further that even if these evidentiary decisions were erroneous, any error was harmless because it was more probable than not that the admission of the evidence did not affect the jury’s verdict.
Finally, Monsanto challenged the size of the punitive damages award. For the last couple of decades, the United States Supreme Court has reined in punitive damages awards on constitutional grounds, in a series of cases holding that ‘excessive’ such awards violate a defendant’s due process rights. The rule of thumb that has evolved is that punitive damages should not exceed a single-digit multiplier of compensatory damages, The panel decided that the punitive damages awarded to Hardeman, as slashed by the district court (Judge Chhabria), did not breach this constitutional limit. From the summary:
The panel held that evidence supported a punitive damages award, punitive damages were properly reduced, and the reduced award – while close to the outer limit – was constitutional. Specifically, the panel held that punitive damages were permissible under California law because substantial evidence was presented that Monsanto acted with malice by, among other things, ignoring Roundup’s carcinogenic risks. The panel held that the jury’s $75 million punitive damages award was “grossly excessive” given the mitigating factors found by the district court. However, considering the evidence of Monsanto’s reprehensibility, the district court’s reduced $20 million punitive damages award (a 3.8 to 1 damages ratio), while at the outer limits of constitutional propriety, ultimately comported with due process.
Bayer faces wider glyphosate problems. Several cities, states, and countries have banned Roundup, as Nick Corbishley noted last week in his NC post, Bayer-Monsanto Fails (At First Attempt) to Block Mexico’s Phaseout of Glyphosate and Ban on GMO Corn:
[A] growing list of countries, states and cities around the world are banning Roundup. They include Mexico, whose government issued a presidential decree on December 31 phasing out the use of the herbicide glyphosate, Roundup’s active ingredient, and banning the cultivation and importation of genetically modified (GM) corn. After pulling a few strings, Bayer was able to win a temporary reprieve from the government’s planned three-year phase out of the herbicide. But that decision has now been overturned by Mexico’s Collegiate Court.
Several environmental groups filed opening briefs in December in 9th Circuit litigation seeking to block EPA’s registration for glyphosate, according to Agri-Pulse, EPA faces lawsuits over dicamba, glyphosate and pesticide exclusion zones. As reported by Common Dreams in ‘Reckoning for Roundup Rolls On’: Ninth Circuit Court Upholds Verdict in Case Against Monsanto:
“Center for Food Safety is currently challenging the federal approval of glyphosate, the active ingredient in Roundup, as unlawful for a number of reasons—including cancer risks to farmers and farmworkers from exposure,” said [George Kimbrell, legal director of the Center for Food Safety]. “Today’s appeals court ruling is another reminder the Biden administration should act and revoke the registration of glyphosate immediately.”
As much as I hope otherwise, I think it extremely unlikely at this point that the Biden EPA will take on big Agri and ban glyphosate.
The Bottom Line
In the unlikely event the EPA were to enact a U.S.-wide glyphosate ban, Bayer would undoubtedly step up ongoing efforts to promote use of its herbicide elsewhere. Poorer countries would be obvious targets of such efforts. Note that other countries besides Mexico – including India – are wary of glyphosate (see this account in The Hindu, Government moves to restrict use of glyphosate).
Even an immediate U.S. or worldwide ban would not rectify the damage to the soil and ecosystem from the widespread use of glyphosate.