WASHINGTON, April 11, 2017 - Both sides found something to be happy about in a federal judge’s ruling last week in a class-action lawsuit seeking damages from lost sales and reduced prices as a result of China’s rejection of corn shipments from the U.S. in November 2013.
U.S. District Judge John Lungstrum, in Kansas City, Kansas, rejected the basis for a nationwide class on the plaintiffs’ Lanham Act claim, and narrowed the issues to be considered at a trial in June. But the judge also denied Syngenta’s request to prohibit an award of punitive damages.
Under the Lanham Act, companies can be held liable for “false or misleading representations in commercial advertising or promotion,” Lungstrum said in his April 5 order.
But the plaintiffs’ attorneys said the elimination of that claim “does not affect the overall damages we are seeking at all. That claim was secondary to our primary negligence claim, which the court found will go to trial and for which we are seeking over $200 million plus punitive damages in the upcoming Kansas trial,” scheduled for June 5. Punitive damages could total in the billions if the plaintiffs prevail.
Tom Redick, an attorney with Global Environmental Ethics Counsel in Clayton, Mo., who has followed the case closely, said he does not think the ruling “is going to slow the plaintiffs down at all.” And Kristine Tidgren, assistant director of the Iowa State Center for Agricultural Law and Taxation’s, wrote on the CALT blog that even though the judge “restricted the scope of the negligence claims the plaintiffs could seek to prove,” his ruling also “favored the plaintiffs with respect to a number of Syngenta’s defenses.”
The plaintiffs’ attorneys said they “look forward to trying the class claims of Kansas corn producers in June, and class claims of corn producers in other states beginning this fall.”
The Kansas case is the first of several bellwether, or “test trials,” scheduled by Lungstrum, designed “to help the parties gauge the strengths and weaknesses of the claims and determine whether they should settle,” Tidgren noted on the CALT blog.
In September, Lungstrum certified statewide classes in Arkansas, Illinois, Iowa, Kansas, Missouri, Nebraska, Ohio, and South Dakota. His certification was upheld by the 10th Circuit in December. A separate case involving Minnesota farmers is scheduled to start in state court in Minneapolis April 24.
Lungstrum’s order is a critical step in “ensuring that all of the over 350,000 U.S. corn farmers will have the opportunity to seek relief for the harm caused by Syngenta’s wrongful conduct,” the plaintiffs’ lawyers said.
The plaintiffs, who did not use the GMO corn known as Agrisure Viptera and Duracade, claim that because of China’s November 2013 decision to block imports of U.S. corn, they suffered losses of between $5 billion and $7 billion. China allowed imports of corn containing the MIR162 trait in December 2014.
In his latest ruling, the judge said the plaintiffs could not show that a 2011 letter from a Syngenta employee to growers, which stated that Syngenta expected import approval from China for Viptera in March 2012, was enough to support its false advertising claim under the Lanham Act.
“There is no evidence that sales occurring after the grower letter affected the fact or duration of plaintiffs’ economic injuries,” Lungstrum said.
The judge, however, said the plaintiffs could argue at trial that Syngenta was negligent because it could have conducted a limited launch of Viptera. “There is evidence that Syngenta believed that limited launches could be successful in avoiding trade disruptions,” Lungstrum said. “Syngenta’s expert conceded that a limited launch would have at least reduced the possibility of MIR 162 corn reaching China.”
“Plaintiffs need not prove that no MIR 162 kernel would reach China, but they must only prove a likelihood that China would not have turned back U.S. corn.”
Regarding punitive damages, Lungstrum said, “Syngenta has certainly not persuaded the court that punitive damages would not be appropriate on any facts here. For instance, if the evidence at trial showed that Syngenta wantonly released Viptera while knowing that the lack of approval in China would cause a serious trade disruption and a significant decrease in demand and prices in the United States, a reasonable jury could decide to award punitive damages.”
The judge also said the plaintiffs could argue at trial that Syngenta is liable for damages because of its commercialization of Duracade, which also contains the MIR 162 trait, designed to control corn rootworm and other insect pests. Duracade was released in 2014, after Viptera.
Two of the plaintiffs’ experts “relied on testimony by a Cargill employee that Cargill ‘could be’ going through the same situation with Duracade that it had experienced with Viptera,” the judge said.
“Syngenta paints that testimony as speculative,” Lungstrum said, but he said the plaintiffs’ experts were entitled to rely on it.
Syngenta had also argued that farmers “should have mitigated any damages caused by a drop in the price of corn by switching to different crops and reducing (or eliminating) their reliance on corn, or by storing corn for later sale, or by using corn only as feed.” But Lungstrum said Syngenta cannot use that defense because it did not provide enough evidence for it.
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