Originally posted on New York Times by Maureen Farrell
Three years after Bayer agreed to pay $10 billion to settle claims that its weedkiller, Roundup, caused cancer, juries continue to award plaintiffs in additional cases billions of dollars in damages, even as the German drug and chemicals giant insists it will continue its fight in court.
In the past two months, in four separate cases, juries have awarded more than $2 billion in damages to a handful of roughly 50,000 claims that weren’t covered by the 2020 settlement. The $10 billion agreement is one of the largest in history.
Bayer has set aside an additional $6 billion, which the company has said is enough to cover pending lawsuits as well aspotential future ones. But analysts and investors worry Bayer could be on the hook for billions more, threatening the 160-year-old company’s future.
Some of the country’s most high profile plaintiffs’ lawyers — including a team that won an estimated $1 billion settlement in2021 from Johnson & Johnson involving its antipsychotic drug Risperdal — are representing thousands of individuals seeking damages from Bayer. Plaintiffs have at least a dozen cases on court dockets in the coming months.
“Plaintiffs are on a winning streak,” said Nora Freeman Engstrom, a professor at Stanford Law School who studies mass tort actions. The recent cases, Ms. Engstrom said, do not bode well for Bayer because plaintiffs’ lawyers can pull statements fromprior testimony and build stronger cases over time. “With each trial, the playing field shifts subtly toward plaintiffs,” she added.
Bayer has said Roundup does not cause cancer. Company executives told The New York Times they will continue litigatingcases, and fight to overturn the four recent verdicts or reduce the jury amounts, noting that final awards in previous caseswere significantly smaller.
“The company will not incentivize the plaintiff law firm business model through mass settlements of 1-800-file-a-claim casesthat have no merit,” Nicole Hayes, a Bayer spokeswoman, said in a statement. “Instead, we will continue to try casesbecause decades of science and worldwide regulatory assessments continue to support Roundup’s safety and non-carcinogenicity.”
Bayer’s woes stem from its 2018 purchase of Monsanto, the maker of Roundup, for $63 billion in cash. Since the deal wasannounced in 2016, Bayer’s shares have plunged more than 60 percent. It is widely considered one of the worst mergers inhistory.
After the most recent verdict in mid-November, in which a Missouri jury awarded three plaintiffs $1.5 billion in damages,Bayer shares slid even more, pushing its market capitalization down to roughly $33 billion, or less than half of what it paid for Monsanto.
Shareholders have pushed Bayer to undo the merger almost since it closed, mainly because of its exposure to Roundup litigation.
“Shareholders are really fed up,” said Marco Taricco, founding partner and co-chief investment officer of Bluebell CapitalPartners, a London-based activist shareholder that bought a stake in Bayer last year. After the recent jury verdicts, as wellas a failed late-stage pharmaceutical trial in November for what was expected to be a promising drug, “there’s morepressure on the company to make structural changes,” Mr. Taricco said.
In June, at the urging of investors, Bayer installed a new chief executive, Bill Anderson. Last month, Mr. Anderson said he would consider various options to improve the company’s performance, including spinning off or selling the company’s crop sciences business, which includes Roundup.
Monsanto started using the chemical glyphosate, the main ingredient in Roundup, in the 1970s to kill weeds. It was only afterthe company developed genetically modified seeds in the late 1990s, however, that Roundup became the dominantweedkiller. The G.M.O. seeds were immune to Roundup, so farmers could spray it on fields, killing weeds but not the crops.
Monsanto then built a giant global business by controlling the so-called glyphosate platform for both the weedkiller and theseeds resistant to it.
Bayer’s determination to battle — and settle — lawsuits tied to Roundup highlights the importance of the herbicide to itsbusiness. For the first nine months of 2023, most of the roughly $19 billion in sales from Bayer’s crop sciences business camefrom the ecosystem built around Roundup.
Bayer said in a statement that herbicides based on glyphosate were “vital to farming, sustainability and the ability toproduce enough food to feed the world’s growing population.”
In September 2016, when Bayer’s then chief executive, Werner Baumann, announced plans to buy Monsanto, it was partly adefensive move. The previous year, Dow Chemical agreed to merge with DuPont. In February 2016, the Swiss pesticide giantSyngenta announced a deal with China National Chemical Corp.
But Bayer underestimated the risk to its business from Roundup’s legal woes. In 2015, the International Agency for Researchon Cancer, a branch of the World Health Organization, classified glyphosate as “probably carcinogenic to humans.”
Robin Greenwald, a partner at the law firm Weitz & Luxenberg who filed one of the first Roundup cases in 2015 after theW.H.O. announcement, said she had no idea at the time how big the litigation would become. “People thought it wasexpensive and risky taking this on,” Ms. Greenwald said.
Her cases were rolled into a bigger group that eventually led to a federal judge’s ruling in July 2018 — just one month afterthe Bayer deal closed — that there was enough evidence that Roundup could cause cancer, based on testimony anddocuments from scientists and doctors.
That ruling opened the door to thousands of additional lawsuits. In August 2018, a jury awarded one California man damagesof nearly $300 million for Roundup’s role in causing his cancer, saying the company should have known of potential risks toconsumers.
After losing several more lawsuits, Bayer in 2020 agreed to a $10 billion settlement with thousands of plaintiffs, whileretaining the right to sell Roundup without having to issue a cancer warning on the herbicide and its products. Bayer thenwon nine consecutive cases against plaintiffs while also settling numerous others for undisclosed amounts.
But in October, Bayer lost three trials, where juries in St. Louis, Mo., San Diego, Calif., and Philadelphia awarded more than$500 million in collective damages to plaintiffs who said Roundup caused their cancer. And last month, the Missouri juryhanded down the $1.5 billion award. (In many cases, judges subsequently reduce damages awarded to plaintiffs from the original jury figure.)
In one of the four cases, a jury awarded the plaintiff $175 million in damages. Tom Kline, one of the plaintiffs’ lawyers, saidthat documents and testimony showing that Monsanto, over 50 years, developed a product it knew was dangerous, helpedconvince the jury.
“They needed to admit what a responsible chemical company would do,” said Mr. Kline, a partner at Kline & Specter whorepresented the plaintiff along with his co-counsel Jason Itkin from Arnold & Itkin. “We proved through the facts that theydid the opposite over a long period of time.”
The two lawyers are well known for winning substantial verdicts or settlements against big companies, including Merck andthe energy company Motiva. In 2019, Mr. Kline and Mr. Itkin won an $8 billion jury verdict against Johnson & Johnson for aman who alleged that its drug Risperdal caused men to grow breasts. The amount was later reduced, but the companyeventually settled with numerous plaintiffs for roughly $1 billion.
Mr. Kline and Mr. Itkin’s next Roundup case is scheduled to start trial in early January in Philadelphia.
Bayer’s determination to challenge new cases is motivated by the murkiness around the science linking Roundup to cancer.
After the W.H.O. unit classified glyphosate as “probably carcinogenic to humans” in 2015, the Environmental ProtectionAgency concluded that there was “no evidence” that glyphosate caused cancer. In late November, the European Commissionsaid that glyphosate could stay on the market for the next 10 years, subject to certain restrictions.
Ms. Hayes, the Bayer spokeswoman, said the jury in Mr. Kline’s case — as well as the other three cases — were presentedwith erroneous information about the E.P.A. and E.U.’s position on the safety of glyphosate that made it appear as if theagencies considered it dangerous.
Bayer is pursuing other avenues beyond direct litigation, hoping to get a Supreme Court ruling or a bill passed in Congressthat would effectively put an end to future cases against Roundup. So far, those efforts have not been fruitful. At the sametime, Bayer faces lawsuits tied to its other businesses, including one involving toxic chemicals or polychlorinated biphenyls(PCBs) in the water supply.
Damien Conover, an analyst with the investment firm Morningstar, said he was worried about the extent to which thecontinuing litigation and costs would hurt Bayer’s overall operations. “It will likely weigh on Bayer’s ability to invest in thebusiness and invest in innovation.”
Maureen Farrell writes about Wall Street, focusing on private equity, hedge funds and billionaires and how they influence the world of investing. More aboutMaureen Farrell
A version of this article appears in print on , Section B, Page 1 of the New York edition with the headline: Bayer Still on the Hook For Roundup’s Bills
