By Jef Feeley and Tim Loh

Bayer AG’s plan for moving on from its Roundup legal woes hit a snag barely two weeks after it announced a nearly $11 billion settlement of claims the popular weedkiller causes cancer when a judge expressed skepticism about its proposed treatment of future claims.

U.S. District Judge Vince Chhabria called the plan to create a class action for future litigants problematic in a court filing Monday and said he was “tentatively inclined” to reject it. He set a July 24 hearing date. Shares of Bayer, which inherited the weedkiller through its purchase of Monsanto, fell as much as 7.1% in Frankfurt intraday trading, the most since March 12.

Bayer’s plan for the future class would establish a scientific panel to determine whether Roundup’s active ingredient causes cancer, while still potentially allowing users of the herbicide to press claims. Many lawyers not participating in the settlement say the plan is designed to protect Bayer.

The San Francisco-based judge’s misgivings won’t derail the nearly $11 billion settlement, as any change to the handling of future claims wouldn’t necessarily affect the rest of the deal, in which the company agreed to resolve about 95,000 of 125,000 existing lawsuits.

About 30,000 claims contending Roundup caused non-Hodgkin’s lymphoma are left unsettled. Some U.S. plaintiffs’ lawyers are vowing to file another wave of new suits that could add tens of thousands to that total.

Related:Bayer supports move to withdraw class agreement

Concerned Investors

The judge’s filing reinforces concerns from investors that Bayer’s Roundup deal isn’t enough to get it beyond the mountain of litigation, Alistair Campbell, an analyst at Liberum Capital, said in a note. While Bayer’s market valuation is “deeply discounted” right now, that situation probably won’t change until the company can convince the market that it’s finally resolved the Roundup legal headache.

Bayer said late Monday the class proposal is still on the table. The company -- whose shares are down about 9% since it announced the settlement on June 25 -- insists that Roundup is safe and has appealed three U.S. jury verdicts against it.

“We appreciate the judge’s order raising his preliminary concerns with the proposed class settlement, which we take seriously and will address” at the hearing, Chris Loder, a U.S.-based spokesman for the Leverkusen, Germany-based drugmaker, said in an interview.

Future Cases

“Thankfully, Judge Chhabria has seen the ruthless plan as an outrageous attempt to deprive every future victim of Monsanto’s killer Roundup of their right to fair and full compensation and to a jury trial,” Tom Kline and Jason Itkin, plaintiffs attorneys for users of the weedkiller who haven’t settled their suits, said in an emailed statement Tuesday.

Related:5 things you should know about the Bayer settlements

The future class was the brainchild of Bayers’ lawyers and some plaintiffs’ attorneys , including San Francisco-based Elizabeth Cabraser and Samuel Issacharoff, a New York University law professor, according to court filings. It took a year of “unrelenting” settlement negotiations to come up with the plan, Cabraser said in a court filing. It’s designed to provide funds to Roundup cancer patients in financial need and finance a review of the science underlying the cancer claims.

Some of Cabraser’s colleagues, such as New York-based lawyer Hunter Shkolnik, opposed the novel class-action idea from the onset. He described it as “nothing more than a legally infirm, backroom deal to protect Monsanto rather than compensating Roundup cancer victims,” in an emailed statement.

William Dodero, Bayer’s global head of litigation, said at a press conference last month he couldn’t predict how many new Roundup cases will emerge and need to be included in the future class. He said the class will feature an independent science panel that will decide whether glyphosate –- Roundup’s active ingredient -- is a carcinogen rather than leave the decision to individual judges and juries.

Three California juries ordered Bayer to pay billions of dollars in combined damages based on findings that glyphosate caused the plaintiffs’ non-Hodgkin’s lymphomas, a specific cancer tied to glyphosate. Those awards ultimately were reduced to about $190 million.

The science panel is designed to have independent experts make the decision on the chemical’s toxicity, Dodero said. “They will be selected by the parties by mutual agreement, and if there is not mutual agreement each party will select two; the four will select the remaining fifth,” he said last month. “They will be objective and a blue-ribbon panel to fully assess the evidence.”

If the panel finds glyphosate is not a carcinogen, then class members would be barred from recovering from their cases, according to court filings. Conversely, if the panel says the chemical can cause cancer, future Roundup users could proceed with their suits.

Sticking Point

That’s one of the sticking points with the class-action mechanism, Chhabria said.

“It’s questionable whether it would be constitutional (or otherwise lawful) to delegate the function of deciding the general causation question (that is, whether and at what dose Roundup is capable of causing cancer) from judges and juries to a panel of scientists,” he said.

He also questioned whether there is an incentive to join the class for future Roundup claimants, who would have five months after the class is approved to opt out of it. “Why would a potential class member want to replace a jury trial and the right to seek punitive damages with the process contemplated by the settlement agreement?” the judge asked.

Chhabria also worried that the science on glyphosate’s cancer-causing properties is still evolving and questioned whether it would pass legal muster to have claimants bound by a lack of toxicity finding that is supplanted by a new study.

He also said the proposal has procedural drawbacks in making sure all potential future Roundup claimants have proper notice that they must decide within five months whether to become part of the class. If they don’t opt out within that time period, they are automatically covered by the plan.

NFL Comparison

“Given the diffuse, contingent, and indeterminate nature of the proposed class, it seems unlikely that most class members would have an opportunity to consider in a meaningful way (if at all) whether it is in their best interest to join the class,” he said.

The Roundup litigation isn’t the first to generate a settlement that addresses future claims.

But unlike the National Football League’s 2014 concussion settlement -- slated to provide at least $765 million to ex-players suffering from brain injuries now and in the future –- the Roundup future class doesn’t apply to a “narrow and readily identifiable” set of claimants, Chhabria said. The NFL’s future class won approval from an appeals court in 2016.

“A class that includes all Roundup users who will get cancer in the future is very different,” the judge said. “For example, the idea that a migrant farmworker or someone who is employed part time by a small gardening business would receive proper notification (much less the opportunity to consider their options in a meaningful way) is dubious.”

The consolidated case is In re: Roundup Products Liability Litigation, MDL 2741, U.S. District Court, Northern District of California (San Francisco).

--With assistance from Veronika Gulyas.

To contact the reporters on this story:

Jef Feeley in Wilmington, Delaware at [email protected];

Tim Loh in Munich at [email protected]

To contact the editors responsible for this story:

David Glovin at [email protected]

Peter Blumberg, Anthony Lin

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