Welcome
Environment & Energy Report

Fear of Future Liability Could Sink Roundup Settlement Talks

Dec. 20, 2019, 11:01 AM

A settlement of 43,000 claims in U.S. courts that the weed killer Roundup causes cancer is unlikely to happen if manufacturer Bayer AG insists on being absolved from future legal claims, according to legal experts.

Originally developed by Monsanto, Roundup is the most widely used herbicide in the world. Ever since Bayer acquired Monsanto in 2018, the company has suffered a series of courtroom losses from plaintiffs alleging glyphosate—Roundup’s active ingredient—causes cancer.

On Dec. 13, Bayer’s lawyers asked the U.S. Court of Appeals for the Ninth Circuit to reverse a $25 million judgment for Edwin Hardeman, a Californian who blames his non-Hodgkin’s lymphoma on exposure to Roundup. Bayer says the failure-to-warn claims at the center of the case are preempted by federal law.

“About 5,000 cases have been filed in federal court alleging that Monsanto failed to warn of the risk that Roundup causes non-Hodgkin’s lymphoma,” the company said. “This appeal has the potential to shape how every subsequent Roundup case is litigated.”

Future Plaintiff Problem

Bayer has been in confidential mediation talks for months to discuss the possibility of settling all or some of the lawsuits.

CEO Werner Baumann said on an Oct. 30 earnings call that the company is “constructively engaging” in talks led by mediator Ken Feinberg, while also planning to aggressively defend itself in future trials.

“With regards to the mediation, we would only consider a settlement if it is financially reasonable and will bring reasonable closure to the overall litigation,” Baumann said during the call.

However, given that Roundup is still widely available and doesn’t carry a cancer warning label, some legal scholars say a settlement of the kind Baumann is referring to probably isn’t possible.

“You could have tens of thousands of people who don’t even know they’re sick. How can they be included in a settlement?” said Jean Eggen, a law professor at Widener University in Delaware.

In theory, a pot of money, or trust could be created to pay out future legal claims, similar to the asbestos trust funds, Eggen says. That’s an expensive prospect, given the likelihood that large numbers of claimants would continue to come forward.

“Unless they [Bayer] are able to find some kind of silver bullet, there won’t be any near-term end to litigation,” said Adam Zimmerman, a Loyola Law School professor and an expert in mass tort law.

That leaves Bayer with few options but to continue to fight the cases in court or hope that appellate courts see the facts of the case differently than the three juries that have reached verdicts against Bayer so far, Zimmerman says.

“The only vehicle that remotely approaches that might be bankruptcy,” he said. “Short of that, or some victories in court, I don’t see what kind of arrangement would absolve them of future liability.”

Warning Label Not an Option

Typically, settlements involving defective drugs, chemicals, or retail items result in the addition of a warning label, or in some cases, removing the product from the market altogether. Generally, such a warning then absolves the company of future liability.

However, in April the Environmental Protection Agency ruled that glyphosate is not a carcinogen, and any attempt to put a cancer warning label on the chemical, as California tried with Proposition 65, would constitute mislabeling, and be a violation of federal law.

“And it’s not just labeling,” said Timothy Backstrom, an attorney who served 25 years in the Office of General Counsel at the EPA and is now a chemical regulatory expert with Bergeson & Campbell P.C. “Any prospective relief that involves warning parties, either through marketing, or statements a company makes, that could all come under legal scrutiny.”

Moreover, notes Backstrom, any settlement could also be taken as implicit acknowledgment that there is a legitimate risk of cancer. That could further hinder Bayer’s ability to maintain glyphosate registrations in other countries, including the company’s home base of Germany, where glyphosate is also under siege.

As it stands, Bayer says it isn’t considering pulling Roundup off the market. In June, the company announced a $5.6 billion investment into developing a glyphosate alternative.

High Exposure Rates, Common Cancer

Another barrier to a large settlement is the ubiquitous nature of glyphosate on the landscape, a factor which defense attorneys say makes it difficult to assess the nature of a plaintiff’s exposure.

And, unlike mesothelioma, a relatively rare form of cancer associated with exposure to asbestos, non-Hodgkin lymphoma is quite common: the ninth most common cause of cancer death in the U.S., with 74,000 new diagnoses per year, compared to just 3,000 new cases for mesothelioma, according to the American Cancer Society.

“That’s a pretty difficult position for a company to be in,” said Backstrom. “When you have several multimillion-dollar verdicts that say your product contributed to this grave disease, that also happens to be widely prevalent in the population, that’s when start to see the TV commercials and lawyers trolling for clients. Before long it creates a kind of momentum.”

In its opening brief to appeal the Hardeman case, Bayer reiterated its longstanding position that glyphosate is “environmentally benign,” and has been approved by regulatory agencies worldwide.

Moreover, based on EPA’s recent instruction that manufacturers can’t add a warning, the company says any claim that Bayer failed to warn customers is preempted by federal law.

Preemption is a legal doctrine that prevents states from enforcing laws that conflict with federal law.

“But that might only apply after EPA ruled on Prop. 65,” which happened Aug. 7, said Loyola’s Zimmerman. “It’s a much harder argument to make that Bayer was bound by preemption before EPA said that. Afterward I think they have a much stronger defense.”

Given the track record with jury trials so far, Zimmerman says the preemption argument may be the company’s best hope going forward.

“But that could also take a really long time for the courts to resolve,” he said.

Smaller Settlement Still Possible?

Bloomberg Intelligence Analyst Holly Froum notes that Bayer’s appeal in federal court could give it leverage in settlement talks. She estimates the settlement value of cases at $10-$12 billion.

However, even if Bayer wins its federal appeal, state cases could still proceed, unless the Supreme Court takes up the preemption question.

In lieu of a large national agreement, others say there may still be a chance for a smaller deal closing out individual cases or groups of claims.

“It’s not terribly complicated,” said Rhon Jones, an attorney with Beasley Allen, an Alabama-based law firm representing some 1,000 glyphosate plaintiffs. “If someone were to propose any settlement, of any size, even if it didn’t involve our clients, I would say that’s a positive because that’s a stark contrast from them saying, ‘Our product is completely safe.’”

Jones added that his case against Bayer goes beyond “failure to warn” claims, arguing that the company knowingly produced a defective and dangerous product, even if it was approved by regulators.

“I think fundamentally what you’re seeing is a whole new way of thinking about what is the law’s role in product regulation, in product liability, in how we regulate products,” said Doug Henderson, an attorney with Atlanta-based King & Spalding LLP.

While agencies play an important role in protecting consumer safety, people are increasingly looking to the courts to provide more restrictions, he said.

“If you’re going to sell a product today, you’re going to have to look at it from all different perspectives, to see if it’s going to withstand a mass tort action,” said Henderson. “That’s how things often change the fastest, for good or for bad.”

To contact the reporters on this story: Adam Allington in Washington at aallington@bloombergenvironment.com; Ellen M. Gilmer in Washington at egilmer@bloombergenvironment.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Cheryl Saenz at csaenz@bloombergtax.com

To read more articles log in. To learn more about a subscription click here.