Originally published on Bloomberg by Greg Stohr and Jef Feeley Updated on
The US Supreme Court rejected a multibillion-dollar appeal from Bayer AG, refusing to shield the company from potentially tens of thousands of claims that its top-selling Roundup weedkiller causes cancer. Bayer shares tumbled.
The justices, without comment, on Tuesday left intact a $25 million award to Edwin Hardeman, a California man who said decades of exposure to Roundup caused his non-Hodgkin’s lymphoma. Germany-based Bayer argued unsuccessfully that the approval of Roundup’s label by federal regulators meant Hardeman’s suit — and others like it — couldn’t go forward.
Bayer last year said a Supreme Court ruling in its favor would “effectively and largely end” Roundup litigation in the US by dissuading future lawsuits. The German conglomerate had pledged $11.6 billion to settle lawsuits, and then said last year it was ready to set aside an additional $4.5 billion if the justices rejected the appeal. That brought the potential reserve to more than $16 billion. The company also said it would set up a renewed program for resolving current and future suits if the Hardeman appeal was rebuffed.
Shares fell as much 4.7% in Frankfurt following the decision, which analysts said reduced Bayer’s value by billions of euros. So far this year, the company had been the best performer of the STXE 600 Healthcare index, with its share price up about 35% compared with a decline of more than 10% for the broader index.
A Supreme Court victory would have saved Bayer an estimated $3 billion from the $16 billion the company has set aside to resolve all the litigation, according to Bloomberg Intelligence analyst Holly Froum. Bayer said last year it will pull the current version of the weedkiller off the US consumer market in 2023.
Bayer “respectfully disagrees with the Supreme Court’s decision,” the German conglomerate said in an email. “The company is fully prepared to manage the litigation risk associated with potential future claims in the US.”
Read More: Bayer ‘Respectfully Disagrees’ With US Supreme Court Decision
“We’re grateful SCOTUS has put an end to Bayer’s strategy of deny and delay,” said Matthew Stubbs, a lawyer representing former Roundup users suing Bayer. “After years of appeals, not a single court has agreed with Bayer in this case. Today, SCOTUS has set a clear path for recovery in the courts, and we look forward to having jury trials throughout the country for decades to come.”
The Biden administration last month urged the Supreme Court to reject the appeal. The justices sought the Department of Justice’s view on whether state-court suits over Roundup should be barred because federal regulators approved its safety label. The government concluded former users should be able to press ahead with their claims.
Last week, a federal appeals court ordered the US Environmental Protection Agency to take another look at whether glyphosate — Roundup’s active ingredient — is a carcinogen. Studies have linked it to some cancers.
Bayer is still seeking Supreme Court review of an $87 million award to a couple who got cancer after using the herbicide for more than three decades. That Bayer appeal includes a separate line of argument that contends a $70 million punitive damage award in the case is constitutionally excessive.
The German chemicals giant inherited the legal mess in 2018 when it acquired Monsanto Co., the herbicide’s maker. The purchase closed just weeks before the first US jury found Roundup caused a user’s cancer. The company, however, recently won four cases in a row over the product.
Hardeman argued he used Roundup from the 1980s to 2012 on his large plot of land in Sonoma County, about 60 miles (100 kilometers) north of San Francisco. He was diagnosed with non-Hodgkin’s lymphoma in 2015. He sued under California law, claiming Monsanto’s failure to warn about Roundup’s carcinogenic risk caused his illness. Jurors awarded him more than $80 million, but the verdict was later cut by the trial judge to $25 million. A federal appeals court upheld the award.
Pesticide Law
At the Supreme Court, Bayer argued the Federal Insecticide, Fungicide, and Rodenticide Act shields the firm from liability. FIFRA, as the law is known, says states may not impose packaging or labeling requirements that are “in addition to or different from” those under the federal law.
The Supreme Court interpreted that provision in 2005 to allow failure-to-warn suits under state law, as long as the state requirements are “genuinely equivalent” to those under FIFRA.
In its appeal, Bayer contended the verdict held the company to a tougher standard than federal regulators have under FIFRA. Bayer said the EPA in 2019 told glyphosate makers that no request to add a cancer warning would be approved because it would be false and misleading. Bayer has steadfastly maintained Roundup doesn’t cause cancer.
Under the appeals court ruling, “a company can be severely punished for marketing a product without a cancer warning when the near-universal scientific and regulatory consensus is that the product does not cause cancer, and the responsible federal agency has forbidden such a warning,” Bayer argued.
‘Unique Risks’
Hardeman’s lawyers disputed that contention, saying the EPA’s 2019 letter doesn’t address the “unique risks” posed when glyphosate is combined with other ingredients. They said the EPA has approved warnings on glyphosate-based formulations like Roundup and has never reached a conclusion as to whether those formulations cause cancer.
Under the Supreme Court’s 2005 ruling, “where, as here, a plaintiff proves a herbicide is dangerous to human health, the manufacturer can be found in violation of both state and federal law,” Hardeman’s team argued.
Bayer also claimed the trial judge improperly allowed expert testimony that Roundup causes cancer. The company said the testimony was speculative.
Bayer has won four of seven Roundup trials so far, with all its losses occurring in California courts. It recently notched a victory in a case in state court in Kansas City in which Hugh Grant, Monsanto’s ex-CEO testified. It was Grant’s first time on the witness stand in a Roundup case.
The Supreme Court case is Monsanto v. Hardeman, 21-241.
