May 17, 2021
By Joel Rosenblatt
Bayer AG lost its second appeal of the three jury verdicts finding that the company’s Roundup weed killer causes cancer.
The U.S. Court of Appeals in San Francisco refused on Friday to overturn the 2019 decision in the only case to go to trial in federal court. The decision may embolden consumers to bring more claims beyond the many thousands the company is trying to resolve in an $11 billion settlement.
Bayer, which was testing an argument that it hoped would undercut thousands of outstanding cases, said it’s disappointed with the ruling and may appeal to the U.S. Supreme Court.
The company contended the U.S. Environmental Protection Agency’s authority to regulate herbicide labeling prohibits states from imposing demands that depart from federal requirements. The company said the verdict was improperly based on a California law requiring Bayer to warn consumers of Roundup’s cancer risk. The EPA supported Bayer’s appeal.
The plaintiff in the case, Edwin Hardeman, testified that he used Roundup for years on his large plot of land in Sonoma County, about 60 miles (100 kilometers) north of San Francisco. Similar to other plaintiffs in the U.S., Hardeman said his exposure caused his non-Hodgkin’s lymphoma. Jurors awarded him more than $80 million, later cut by the trial judge to $25 million.
The appeals court panel affirmed the $25 million award, though one of the three judges dissented, saying the $20 million punitive damages portion of the award is too high according to constitutional guidelines.
The company’s “conduct is not particularly reprehensible in light of the ongoing scientific debate,” U.S. Circuit Judge N.R. Smith wrote.
Hardeman’s suit was the second of three Roundup trials Bayer lost in 2018 and 2019 with average awards of almost $50 million per plaintiff that sent its stock into a downward spiral. The other two cases were tried in California state court. The company lost its appeal of the first verdict -- though it did win a reduction in damages -- and is appealing the third verdict.
The legal threat has weighed on Bayer since its 2018 acquisition of Monsanto, maker of the herbicide. Despite an $11 billion proposal to resolve the U.S. suits announced in June, the Roundup litigation has proved more expensive and difficult to contain than Bayer calculated. In November, the judge who handled Hardeman’s trial and has been overseeing about 4,000 federal cases resumed readying cases for trial after a pause to allow for lagging settlement negotiations.
Bayer said Friday it continues to stand by the safety of Roundup based on decades of testing by regulators.
“The 9th Circuit decision is wrong on the issue of federal preemption as it is not possible for Monsanto to comply with federal law under which EPA has determined that a cancer warning is unwarranted and improper, and also comply with state law failure-to-warn claims seeking the very cancer warning EPA forbids,” the company said in a statement. “The company will pursue all legal options, including petitioning the U.S. Supreme Court to review this case.”
Lawyers for Hardeman said he’s pleased with the ruling.
The court ruled that “substantial evidence of Monsanto’s malice was presented to the jury, supporting punitive damages,” Aimee Wagstaff and Jennifer Moore said in an email. “Internal emails showed that Monsanto knew of the risk of cancer and failed to warn consumers like Mr. Hardeman. Today is significant for consumers holding pesticide companies like Monsanto accountable for causing thousands of people cancer.”
The appeals court case is Hardeman v. Monsanto, 19-16636, U.S. Court of Appeals for the 9th Circuit (San Francisco). The district court case is In re: Roundup Products Liability Litigation, MDL 2741, U.S. District Court, Northern District of California (San Francisco).
© 2021 Bloomberg L.P.
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