Bayer is sticking to its legal strategy of trying individual Roundup cases in court, even as a series of recent losses has some investors and plaintiffs’ lawyers questioning the wisdom of that approach.
After nine victories in a row in trial courts, Bayer has lost four straight cases, the latest a whopping $1.56 billion jury verdict out of state court in Missouri. In that case, three plaintiffs claimed exposure to Bayer’s Roundup herbicide caused their cancer, and the jury concluded the company failed to adequately warn them of the product's dangers.
“This is the fourth consecutive trial verdict in favor of injured Roundup plaintiffs in as many weeks and signals a massive turning of the tides in the overall litigation,” the law firm Forrest Weldon in Dallas, Texas, said following the verdict.
“Plaintiffs have been awarded $1.25 million, $175 million, and $332 million respectively in those other litigations,” said the firm, which represents three plaintiffs in the case, each of whom was awarded $500 million in punitive damages.
Wolfgang Nickl, BayerBayer’s share price has dropped more than 22% over the past month and closed trading Tuesday at $8.35 per share — near its 52-week low.
Bayer settled more than 100,000 cases in 2020 for about $11 billion but still faces some 47,000 claims, a spokesperson said.
The company, which bought Monsanto in 2018 for $63 billion, has said it will stay the course. In an earnings call held before the most recent, billion-dollar verdict was in, Chief Financial Officer Wolfgang Nickl said while the company obviously doesn’t like to lose, “We did not expect [to] win every case.”
He said the $1.25 million award in the Missouri case that broke the winning streak, which was made up of compensatory damages only, would not “remotely” cover the plaintiff’s costs, “so that's not going to be a strong incentive to keep going.”
The attorney in that case, however, told Courtroom View Network that the verdict was significant because Bayer had not offered any money to settle.
“The tide is turning back as we gain more knowledge about the tobacco-company style defense of Monsanto,” attorney T. Roe Frazer II of Frazer Law said.
Bayer, however, appears determined to stay the course.
“Our strategy — and I won't go into a lot of the details — is really continuing to [keep] pointing out the science to the juries in the various courtrooms,” Nickl said. He also mentioned the recent decision from the 9th U.S. Circuit Court of Appeals finding California’s cancer warning label for Roundup was unconstitutional.
“That's a very, very strong signal,” Nickl said.
Bayer issued a statement after the $1.56 billion verdict in Missouri, voicing its intention to appeal and addressing the four losses.
“We have strong arguments to get the recent unfounded verdicts overturned and the excessive and unconstitutional damages eliminated or greatly reduced,” the company said. “Damages were greatly reduced in the three early trials the company lost.”
In those cases, which received wide publicity, juries returned awards of about $2.4 billion. On appeal, however, those awards were drastically reduced, leaving the plaintiffs with $132.57 million.
The recent headlines have caused some investors to shudder. Institutional investor Union Investment in Frankfurt, Germany, called on Bayer earlier this month to rethink its legal strategy.
“Bayer should review its strategy again now to avoid further negative headlines,” Markus Manns, a senior portfolio manager for German firm Union Investment, told Reuters after the first three losses following the winning streak.
Asked whether he held the same view now, he said that his quote was “a bit too harsh.”
“The recent trial losses are very unfortunate, but this is probably part of the U.S. litigation system — that you cannot predict the outcome of a particular litigation,” Manns said in an email to Agri-Pulse. “It demonstrates that the glyphosate litigation is far from being over.” Glyphosate is the active ingredient in Roundup.
But he warned that “a quick settlement with the remaining cases would be expensive for Bayer. Maybe they should adjust their legal strategy a bit (versus changing it completely) and try harder to settle cases they might lose.”
Continued Manns: “It is paramount that the negative glyphosate news flow finds an end. But this is no secret to management. The U.S. legal system is very complicated and unpredictable. And while we are disappointed that Bayer lost four consecutive cases in a row, we trust them to find the right balance between settling individual cases and fighting others in the court.”
Roundup plaintiff lawyers are less forgiving. Thomas Kline — who represents Ernest Caranci of Philadelphia, winner of the $175 million award — accused Bayer of “engaging in relentless, unwarranted and non-meritorious attacks on the courts, judges, and even jurors, rather than accept responsibility for their cancer-causing weed killer.”
Ron Miller of Miller and Zois in Baltimore said on his Roundup litigation website that “these last four verdicts will almost certainly have an outsized impact on Roundup settlement amounts. Bayer keeps waiting to settle hoping something good will happen. This is going from bad to worse to — I’ll say it again, existential threat — for Bayer.”
In an email, Miller said, “Bayer's strategy initially involved settling cases quietly, allowing only those least favorable to plaintiffs to reach trial,” which he called “brilliant.”
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“It worked,” Miller said. “Many plaintiffs’ lawyers were despondent. But Bayer missed the opportunity to leverage this into a comprehensive settlement [that] could have substantially reduced the overall case numbers. Bayer may have thought it had a new winning strategy for these Roundup lawsuits. That proved to be a misjudgment, as recent outcomes have shown.”
James Onder, Onder LawMiller also dismissed the significance of the 9th Circuit decision. “I don’t think the Prop 65 decision has anything to do with the price of tea in China,” he said.
James Onder of Onder Law in Missouri, which has 14,000 Roundup cases — most in state courts — said Bayer needed a change in its negotiating team and strategy.
As for prospective settlement amounts, “the number is much higher now than it was a couple of months ago,” Onder said.
On the contrary, Clay Massey, a toxic tort lawyer at Alston & Bird in Atlanta, told Agri-Pulse he believes Bayer’s approach makes sense.
“They've got to play what I call the long game, which is common in mass torts,” he said. “You have to just continue to pick good cases to try, pick the right cases to settle, and then try one case at a time and continue to make the plaintiffs work for outcomes in these cases.”
“It appears that is what Bayer is doing, and if that is what they're doing, I think it's the right strategy,” he said.
Bayer is facing financial headwinds. Its latest quarterly report showed lower earnings in all its divisions and projected zero free cash flow for the latest fiscal year. On a Nov. 8 earnings call, company CEO Bill Anderson said Bayer is looking at separating either the Consumer Health or Crop Science divisions from the company, which also has a Pharmaceuticals Division.
“Bayer expects a soft growth outlook and continued challenges to the company’s profitability for next year,” the company said.
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