Federal Judge Nixes Proposed Monsanto Glysophate Settlement, Deepening Black Hole for Bayer

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We are stepping on Jerri-Lynn’s toes a bit, since she has been following Monsanto litigation closely. Today we are providing an update on a effort to settle a large group of pending and potential cases. The short version is that this effort, like an earlier attempt, was rejected by Federal judge in the Northern District of California. We’ve embedded his order at the end of this post.

To catch you up on this sorry story, Bayer bought Monsanto, despite its known glysophate litigation risks, as a poison pill, to make Bayer too big, and by loading up the company with a lot of debt to finance an “all cash” offer to avoid shareholder approval, too leveraged to be an attractive target to even larger companies on the prowl.

The poison pill part worked out even better than any of the Bayer executives could possibly have anticipated. Bayer has been widely deemed to be the worst deal of all time, with the $63 billion purchase price effectively going poof in the reduction of Bayer’s stock price as consumer lawsuits started piling up. Bayer’s board and management were castigated in an unheard-of successful vote of no confidence by Bayer’s German investors. The gross misconduct of Bayer’s management and board has also produced a novel and potentially deadly lawsuit, which we described in Devastating Lawsuit Targets Bank of America, Credit Suisse, and Bayer Board Members and Executives Over Disastrous Monsanto Acquisition.

Even more bizarrely, Bayer hasn’t changed its strategy for selling Roundup one bit. It has not only not taken it off the market or attempted to reformulate it, but it hasn’t even toughened up the warnings on its labels, apparently believing that doing so would be an admission of guilt. So Monsanto is continuing to rack up even more liability via its refusal to change course.

Her latest post, on how the second Roundup case to go to appeal, described how a three judge panel in the 9th Circuit upheld a lower-court decision in Hardeman v. Monsanto, which awarded $25 million to plaintiff Edwin Hardeman. He’d argued that his non-Hodgkins lymphoma was the result of exposure to Monsanto’s herbicide Roundup, whose active ingredient is glysophate. A jury had awarded Hardeman nearly $5.3 million in compensatory damages and $75 million in punitive damages, which the court cut to $20 million.

Not only was the loss another blow to Monsanto, but two elements of the ruling were particularly damaging to the chemical company’s prospects. One was rejecting Monsanto’s argument that the WHO finding that glysophate was a probable carcinogen to be presented as evidence since the FDA had made no such determination. Second was to reject Monsanto’s argument that its labeling met applicable Federal standards (the case had been argued using more stringent California rules). affirmation of the reasonableness of the punitive damages.

This result is the latest in a string of legal losses. As we wrote in August 2020:

The litigation has gone as badly for Bayer as it possibly could have. Rather than try to settle cases, Monsanto allowed them to go to trial and Bayer did not attempt a last-ditch volte-face. The first case delivered an enormous verdict, a $289 million judgment, with $250 million of that punitive damages. Bayer fared just as badly in appellate court:

To make matters worse — if that was possible, in July 2020 Bayer then lost its appeal in the key first case of the Roundup litigation war — a devastating decision that rejected all the legal/scientific arguments Bayer’s executives promised would defeat and stop the suits. The opinion upheld the factual findings and a punitive damages award based on Monsanto’s conduct vis a- vis Roundup, i.e., “malice and oppression.” On July 20, 2020 Law 360 reported:

Monsanto Loses Cancer Liability Fight in 1st Roundup Appeal:

A California appellate court on Monday affirmed a jury’s finding that Monsanto Co. is liable for a former school groundskeeper’s cancer in the first case to go to trial over Roundup’s alleged links to cancer…

A unanimous three-judge Court of Appeal panel rejected arguments by Bayer … that plaintiff DeWayne “Lee” Johnson failed to prove liability and causation, and that Johnson’s failure-to-warn claims are preempted by federal law. … Monsanto challenged the trial court’s findings on a number of legal fronts…

“None of these arguments are persuasive,” the opinion said.

As the filing explains in much more detail, Bayer’s efforts to reach a global settlement have simply resulted in the company paying $13 billion but not stopping all of the current cases, let alone future ones.

Now to Jerri’s background on this round of settlement talks:

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.

As you can see from the order below, the judge nixed the new and improved proposed settlement. Childrens Healh Defense provided a decent high level summary:

The federal judge overseeing nationwide Roundup litigation today denied Bayer’s latest attempt to limit its legal liability from future cancer claims associated with its glyphosate-based herbicides, citing numerous “glaring flaws” in a settlement proposed to apply to Roundup users who develop cancer in the future.

Saying parts of the plan were “clearly unreasonable” and unfair to cancer sufferers who would be part of the class settlement, U.S. Judge Vince Chhabria castigated Bayer and the small group of lawyers who put the plan together in conjunction with Bayer.

He pointed out that the company has been “losing trials left and right” in claims brought by people suffering from non-Hodgkin lymphoma (NHL) who alleged exposure to Monsanto’s Roundup and other glyphosate-based herbicides were the cause.

Bayer has owned Monsanto since 2018 and has been struggling to defend the line of glyphosate-based herbicide products such as Roundup that Bayer inherited in the acquisition. Cancer victims have won three trials held to date and tens of thousands of other plaintiffs have filed lawsuits alleging exposure to Monsanto’s herbicides caused them to develop NHL while Monsanto spent decades hiding the risks.

Judge Chhabria said in his decision that the company’s desire to set up a “science panel” to determine whether or not the herbicides actually cause cancer rather than leave that question to future juries is because of the trial losses the company has so far suffered.

The “reason Monsanto wants a science panel so badly is that the company has lost the ‘battle of the experts’ in three trials, the judge wrote in his order.  “At present, the playing field on the issue of expert testimony related to causation is slanted heavily in favor of plaintiffs.”

Judge Chhabria’s open frustration speaks volumes, and that seems to reflect his view that Monsanto would not accept a deal that would be fair to plaintiffs (his annoyance thus also reflects the fact that the plaintiffs’ lawyers are selling out their clients).

The filing we cited from the suit against Bayers’ management, board, and investment bankers makes clear that Bayer did not bother investigating the level of proof needed in the US to have good odds of winning consumer liability lawsuits. They had been assured that there was no scientific proof that glysophate caused cancer. Hence Monsanto’s insistence on a “scientific” panel. As the judge highlighted, it’s an obvious device to have “scientists” more favorable to its stringent views authorized to make decisions.

The judge also took a dislike to other parts of the settlement, such as the notion that potential plaintiffs had to opt out in a set time period, otherwise they’d lose their right to litigate. In fact, just about anyone could be a potential plaintiff and there’s no way to let them know of their rights. It also set a four year window for identifying cases when it regularly takes 15 to 20 years after exposure to develop cancer. And the judge also thought that the $2 billion that Monsanto allotted for the settlement could run dry.

The fact that the settlement fell so far short of what the Judge Chhabria deemed to be fair and reasonable says Monsanto is in denial. The company seems destined to go the asbestos route, where companies put themselves in bankruptcy and the courts required them to establish trusts to pay damages to victims. And what will Bayer say to its German shareholders then?

00 Northern California District Order Denying Motion for Preliminary Approval of Monsanto Settlement
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    Bayer deserves everything it gets hammered with legally. Bayer gave the world heroin and was very active at the Auschwitz, Buchenwald, Dachau and Gusen concentration camps using experimental drugs on innocent inmates who were destined for the gas chambers and ovens. IG Farben (Bayer) was an early and enthusiastic supporter of Hitler’s Nazi regime.

  2. JTMcPhee

    The important point for this former lawyer who got involved in class action multi-district litigation is the judges observation that “a small group of lawyers” was selling out their clients.

    Amazing how vicious the fight is between the “plaintiffs’ bar” lawyers over who is going to be “lead counsel” in MDL and class actions. If they put half that energy into representing their clients…

  3. Sam F

    There is also a Ninth Circuit appeal of another California Northern District decision, that the theft of $120 million in Florida conservation funds by politicians, causing the loss of at least $3.5 million to people in that district, was somehow too “insignificant” to warrant prosecution there of the Florida thieves, although equivalent to 3,500 felony crimes. The thefts were by Republican politicians, who control the state and federal courts in Florida, so judges there refused to request federal investigation, and Republican judges in Hawaii, Oregon, and California jumped on the case and denied jurisdiction on false pretenses, even though the case says on its cover that Republican judges may not take the case due to conflict of interest. So we will soon see whether the Ninth Circuit cares about justice, or whether the judiciary only cares about the largest bribe source. That is a circuit where most of the judges were appointed by Democrats, but money talks, and the political gangsters have more than all but a few citizens.

    For those curious, jurisdiction outside of Florida is due to the unlawful payments of conservation funds being covered by bonds with interest paid by real estate taxes, including that with out-of-state owners, so that other states suffered substantial losses due to the thefts.

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