Bayer Agrees to $10.9 Billion Glyphosate Settlement

By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.

Bayer agreed to a $10.9 billion settlement yesterday, which resolves much – but not all – of the litigation risk it  assumed when in 2018 it acquired Monsanto, the original manufacturer of the glyposate-based herbicide Roundup, according to the WSJ, Bayer to Pay Up to $10.9 Billion to Settle Lawsuits Over Roundup Weedkiller.

Plaintiffs allege its product causes cancer – a claim the company vehemently denies and insists is not supported by scientific evidence (for background on the litigation, see my previous posts, here, here, here, here, and here.)

The company has lost three multi-million dollar jury verdicts, and faced tens of thousands of pending suits. Investors have become increasingly nervous about just how much litigation risk the company had held until yesterday. Indeed, there was massive shareholder unrest  over these liabilities, which spilled over to outright revolt last year.

The settlement leaves open the possibility of future litigation. Per the WSJ:

Wednesday’s deal, which follows months of heated talks between Bayer and plaintiffs’ attorneys, doesn’t change anything in Bayer’s view that glyphosate, the active ingredient in Roundup, is safe and doesn’t cause cancer.

Bayer didn’t admit to any wrongdoing as part of the settlement and continued to defend its decision to purchase Monsanto. The company will continue to sell Roundup.

The agreement, however, leaves open the potential of more lawsuits being filed against the company in the future, an issue investors have been particularly concerned about.

As part of the deal, Bayer said it has set aside between $8.8 billion and $9.6 billion to settle claims brought by lawyers representing some 95,000 plaintiffs, as well as some 30,000 more claims that haven’t yet agreed to the settlement. The company said it would set aside another $1.25 billion to work toward a resolution of future claims, including funding a panel to evaluate whether the product causes cancer. The findings from that panel are geared to help shape the outcome of litigation going forward.

The company seeks in these future potential lawsuits to take the determination away from juries as to whether glyphosate causes cancer. Over to the WSJ:

That Bayer’s Roundup products will continue to be sold, without a cancer warning label, leaves the company exposed to future lawsuits. It creates a unique legal conundrum for the company over how best to guard itself against potential future litigation.

To attempt to resolve the key question of whether glyphosate is a carcinogen, Bayer is seeking court permission to create a class of future plaintiffs and fund a five-member scientific panel that will spend several years evaluating the link between Roundup and cancer.

The panel will report its findings to U.S. District Judge Vince Chhabria in San Francisco. A conclusion that the product doesn’t cause cancer will essentially shut down any future cases. If the panel does find a link between Roundup and cancer, Bayer would have to fight plaintiff-by-plaintiff to prove the individuals’ cancer wasn’t caused by the product, a point that unsettled some investors.

Mr. Baumann said on a conference call Wednesday that while “it’s not 100% certain,” Bayer is confident the panel will back its view that glyphosate isn’t carcinogenic. The company has previously said that hundreds of regulatory agencies, including the Environmental Protection Agency, and scientists have deemed the product safe.

“We need to take the decision about carcinogenicity of the product out of the hands of juries,” said Mr. Baumann. The scientists on the panel, he said, would be selected both by Bayer and plaintiffs’ lawyers, to come to a “fair and solid” conclusion.

The creation of such a court-overseen science panel is rare, said University of Georgia law professor Elizabeth Burch, and raises questions over whether future plaintiffs who may not be sick yet are getting a fair shot at pressing claims that Roundup caused their illnesses.

Bayer’s Woes Not Confined to Use in US

Glyphosate is currently licensed for use throughout the EU, accordimg to Deutsche Welle, What’s driving Europe’s stance on glyphosate. But this use is not uncontested, According to Deutsche Welle:

The controversy surrounding glyphosate came to high drama in November 2017 when EU member states voted to extend the commercial license of the weed killer for a period of five years. The measure passed only narrowly and due to the ‘yes’ vote of German Agriculture Minister Christian Schmidt.

Schmidt’s unilateral decision disregarded split opinions within Chancellor Angela Merkel’s cabinet that originally agreed Germany should abstain in the vote.

Moreover, a European Parliament report issued in January 2019 found that EU regulators based their decision to relicense glyphosate on an assessment that was plagiarized from a coalition of pesticide companies, including Monsanto.

The scandal has caused a number of countries in the bloc to introduce individual legislation banning or restricting the use of the substance.

The state of EU public opinion is such that license is unlikely to be renewed, and many EU states have already banned its use. According to the Deutsche Welle account:

In Europe, the shift in public opinion about glyphosate was illustrated by a 2016 poll in the five largest EU countries showing some 66% percent of respondents favoring a glyphosate ban.

In 2017, over 1.3 million people signed a petition calling for a European ban of glyphosate, and putting pressure on Brussels to restrict or even ban the use of the herbicide.

Two Additional Settlements

At the same time as the gylphosate settment, Bayer agreed to two other settlements, including one relating to claims for another herbicide, dicamba. According to the Wall Street Journal:

Bayer also said it would pay up to $400 million to resolve legal challenges and crop-damage claims to another of its herbicides, dicamba, which the company has marketed to kill weeds that have evolved to resist Roundup. Farmers and agricultural experts have blamed dicamba-based sprays for drifting on winds and damaging millions of acres of soybeans, peaches and other crops.

For further background on this lawsuit, see this recent post and this update by the Midwest Center for Investigative Reporting, In Roundup settlement, Bayer reaches $400 million deal with farmers over dicamba.

The Bottom Line

Within the US, Bayer will continue to try to settle glyphosate legal claims with plantiffs who have yet to sign onto the settlement. Bayer has not admitted Roundup causes cancer – and indeed continues to insist otherwise – and persists in defending its Monsanto acquisition. Roundup will continue to be sold without any cancer warning label.

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