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GM rice contamination leads to proposed class action

Last August, markets reacted negatively when the USDA announced a Bayer CropScience GM trait had been found in the U.S. rice supply. Most thought lawsuits were inevitable.

Now, nine months later, hundreds of suits have been filed and more are expected. Besides bringing a case alone, an option for a rice farmer is to join a proposed class action that's been moving through U.S. District Court Judge Catherine Perry's St. Louis courtroom since last December.

For the plaintiffs, Perry named Don Downing of St. Louis law firm Gray, Ritter & Graham as co-lead counsel along with Adam Levitt of Chicago's Wolf Haldenstein Adler Freeman & Herz. Levitt has experience with agriculturally-related class actions, having worked on the StarLink contamination case.

Since last August, Downing has filed suit on behalf of over 200 Missouri and Arkansas rice farmers. In the proposed class action, there are now some 460 rice farmers representing over 248,000 acres of rice.

In an April filing, Downing said total compensatory damages for plaintiffs and other members of the proposed classes may approach or exceed $1 billion — and that's before taking into account punitive or statutory damages.

Recently Downing spoke with Delta Farm Press about his expectations for the case, timeframes for the litigation and how the plaintiffs' investigation into the contamination is progressing. Among his comments:

On the setup…

Besides Downing and Levitt, “there are six law firms that are on an executive committee. That includes, basically, the team of lawyers that will prosecute the actions on behalf of the plaintiffs.

“Judge Perry has given us a deadline of (May 17) to file an amended and consolidated class action complaint. We will do that and allege claims on behalf of farmers in each of the five long-grain rice producing states: Louisiana, Arkansas, Missouri, Mississippi and Texas.

“There will be separate class actions all in one large consolidated complaint. For example, there will be several counts on behalf of Louisiana rice farmers. There will be the same for Arkansas rice farmers. That will be done for each state.

“Also, Bayer's lawyers, Levitt and I have been working on various procedural type agreements. Those include a confidentiality agreement, an electronic discovery agreement, and a document preservation agreement.

“We're also working on a scheduling order that we intend to submit to Judge Perry the week of May 28. Actually, May 29 is the date by which we need to file a joint statement setting forth the agreement we can reach on the various items (listed above).

“Judge Perry will have a hearing for the lead lawyers on May 31. That will be a scheduling conference. At that time, Judge Perry will set various deadlines — let us know how she'll process the case — going forward.”

What does this mean for the farmers? They can join the class at any time?

“All rice producers in the five state region I mentioned (are eligible).

“They'll be part of the class if it's certified. The judge must make a determination about whether this case is appropriate for class action. There won't be a decision on that until later this year — fall or winter, probably.

“(If it is certified), every rice producer in that five state region will have a chance to opt out of the class. He can choose to not be part of the action.”

Eligibility criteria?

“The amount of acreage and bushels of rice will have some impact on the amount (of money) each farmer recovers. But in terms of whether they participate in the case, all they have to be is a long-grain rice producer.”

How are negotiations with Bayer's lawyers going?

“Both sides are trying to be professional in their dealings with each other. We've had no difficulty getting along with Bayer's lawyers … We certainly have disagreements, but we're able to work through them. To the extent we can't agree on issues, Judge Perry will resolve things.”

You've visited Mid-South rice farmers. What are you hearing from them?

“The farmers I've spoken with understand litigation takes time. That's particularly true when there's been, I think, about 195 cases filed around the country. It will take time to get the procedural equipment in place to let these cases move.

“But we've assured farmers we're moving as fast as we possibly can. And I know Judge Perry, in previous hearings, has expressed her interest in moving the case along as efficiently and expeditiously as possible.

“But (that's difficult) because there are so many states, so many farmers, so many state laws to consider, that it takes more time than a garden variety automobile accident case, for example.

“We have heard from farmers who have gone out of business — or gotten out of the farming business.

The toll on farmers…

“Many farmers have decided to quit planting as much rice as they have in the past. That's for a variety of reasons, but one is the significant rice seed shortage caused by the contamination of the Cheniere and Clearfield 131 varieties.

“As a result, many farmers couldn't obtain the type of rice seed they needed. Or, they couldn't obtain sufficient quantities of it. Therefore, some farmers were forced to plant rice seed they feel will yield less than their preferred variety. Other farmers have been forced to plant crops that are substantially less lucrative than rice.

“Combine that with all the other problems the contamination has caused — the rice price isn't where it would have been had this not happened — and we've lost a chunk of our export market. I know there are a lot of efforts to minimize that problem. But the fact remains that the world price for U.S. rice is substantially lower than it would be if this hadn't happened. All U.S. long-grain rice farmers have been damaged in that regard.

“Other farmers have incurred costs of the decontamination of their equipment, of their grain bins and machinery. And the whole rice distribution system has also incurred decontamination costs that will ultimately be passed along to the rice producers. Those will come in the form of basis points they have to pay or other charges and fees that will be passed to them.

“At the end of the day, our view is the rice producers are left holding the bag because of the contamination. That's what this case is all about: obtaining compensation for rice producers for the economic losses they've suffered.”

Do you have a figure yet on how much this has cost?

“No. On reason is some of the damages are continuing to accrue. (Getting a figure) will be part of what will be happening during litigation. We have retained economic experts that are looking into the damages suffered by rice producers as a whole.”

On new cases…

“Cases continue to be filed. The vast majority of them have been filed by rice producers. But there have been cases filed by mills, by exporters and importers and others that were sitting on a substantial quantity of rice that was devalued as a result of the contamination.”

On the USDA investigation into the cause, or causes, of contamination…

“Our understanding is their investigation is continuing … They haven't told us why it's taking so long.

“We are doing our own investigation. Once Judge Perry allows the discovery process to go forward — and we anticipate she'll allow the parties to begin this summer — we'll have the opportunity to issue subpoenas to get to the bottom of what happened, to do a full-scale investigation.

“Right now, we don't have subpoena power to force Bayer to answer questions under oath. But we will have that beginning in July.”

You're only going after Bayer?

“Bayer has been named in virtually all the cases. It was their GM (trait) that contaminated the U.S. rice and seed supply. But there are cases in the multi-district litigation that have named as defendants Riceland and LSU. They're part of the proceedings.”

Best and worst-case guesses for when the trial will begin or a settlement is made?

“A settlement could happen anytime, but we don't look for one anytime this year. From our discussions with Bayer, it seems they want to pursue this through litigation for some time.

“We don't look for any final resolution during 2007. It's possible something could be done in 2008 — I think that's the first opportunity for farmers to see a result. But it could be 2009, or beyond, before this winds down and is completed.”

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