By Joel Rosenblatt and Jef Feeley
A $79 million award against Bayer AG was slashed by three-quarters almost a month after the company reached a settlement to resolve lawsuits over its flagship weed killer Roundup.
Bayer shares rose as much as 2.1% in response to the decision by a California appeals court, which affirmed the 2018 verdict in favor of a landscaper while cutting his award to $20.5 million.
The ruling, however, may buttress tens of thousands of claims arguing Roundup causes cancer. It could embolden settlement holdouts to demand bigger payouts and spur more lawsuits by users of the herbicide who haven’t gotten sick yet, said Anna Pavlik, a senior counsel at investment adviser United First Partners in New York.
“This risk is precisely what likely drove Bayer to settle some of the current cases before the appeal decision was announced,” Pavlik said.
The San Francisco-based court rejected the central argument Bayer is relying on to overturn all three verdicts it has lost in California. The company claims the U.S. Environmental Protection Agency has reviewed and approved the Roundup warning label and that the suits ignored the agency’s authority. Federal regulation of Roundup, Bayer argues, preempts California law.
Bayer, maintaining that Roundup isn’t cancerous, appealed the three verdicts, which resulted in a total of $191 million in damages, none of it covered by the settlement. Roundup users in all three cases convinced juries that under California law the company had failed to properly warn users that Roundup’s use can cause cancer.
The lawsuit isn’t covered by Bayer’s broader settlement resolving 95,000 of approximately 125,000 U.S. lawsuits by Roundup users.
Monday’s decision isn’t the last word on the issue. Bayer can still appeal to the state supreme court, and it may have better luck pressing similar arguments before a federal appeals court over another verdict.
In an emailed statement, Bayer lauded the appeals court’s reduction of the sum, adding that it continues to believe the verdict and damages awards are “inconsistent with the evidence at trial and the law” and that it’s considering an appeal.
“We continue to stand strongly behind the safety and utility of Roundup, a position supported by four decades of extensive science and favorable assessments by leading health regulators worldwide,” Bayer said.
Mike Miller, who represented the landscaper, Lee Johnson, at trial, said the ruling came as no surprise given the tenor of oral arguments before the court last month.
“We’re very happy for Mr. Johnson that the court validated his claim,” Miller said. He declined to comment on the court’s decision to slash the award.
Johnson initially won $289 million, later cut down by a lower-court judge to $78.5 million.
The case is Johnson v. Monsanto, A155940, California Court of Appeal (San Francisco).