There are strong signals that Bayer is closing in on a settlement agreement that will bring the Roundup saga to an end. Several jury trials that were scheduled to begin in early February have been postponed indefinitely while the company is in mediation with the plaintiffs. However, the settlement agreement still has not been signed and the matter has not fully been settled. There are numerous issues that are complicating a possible settlement, although both sides have significant incentives to settle the case. For now, negotiations between both parties are continuing and legal experts are predicting that any possible roadblocks are surmountable.
The Ongoing Roundup Litigation
To recap, Bayer is facing tens of thousands of lawsuits related to its Roundup weed killer product. Bayer inherited the legal mess because it purchased Monsanto, who originally made the product. In the deal, Bayer assumed all of Monsanto’s legal liabilities.
Bayer could not have anticipated that it would have taken possession of such an expensive issue that would threaten the company’s future prospects. However, the magnitude of the liability became clear in 2018 when a California jury awarded a plaintiff almost $300 million in damages because it held Monsanto responsible for his case of terminal lymphoma. The real problem for Monsanto was the issue of punitive damages. The jury reacted viscerally to evidence that Monsanto had many different indications of the possible dangers of the product but instead of warning consumers or pulling the product, the company invested heavily in trying to influence the scientific debate. Monsanto funded research products and found ghostwriters to sign its conclusions that Roundup is safe.
The problem got much worse for Bayer as subsequent juries also hit the company with significant damages. One married couple was awarded $2 billion by a jury for their injuries. While trial courts have reduced the verdicts, the company still faced large-scale liability.
Now, the parties are reported to be discussing a settlement agreement in the vicinity of $10 billion. However, despite both parties’ desire to settle, there are still some issues impeding an agreement. One of these roadblocks comes in the form of the Environmental Protection Administration. The EPA has been the lone regulatory holdout worldwide that insists on classifying Roundup as completely safe notwithstanding the mounting evidence to the contrary. Other bodies, including the World Health Organization, have acknowledged that there is a possibility that Roundup is a carcinogen.
The EPA’s Viewpoint May Prevent a Warning Label on Roundup
However, a Roundup settlement may mean that Bayer would need to put a warning label on the product to inform customers of the cancer risk. This would protect it from future Roundup related cases. However, companies are not allowed to put anything on a warning label that conflicts with U.S. government research or guidance. The fact that the EPA continues to dig in its heels would keep Bayer from being able to put a warning label on Roundup, meaning the only way for the company to fully protect itself would be to pull the product from the market. Bayer wants to continue selling Roundup and continues to make large research and development investments in the product so the warning label issue can present a significant holdup so long as the EPA remains recalcitrant.
The lack of a warning label presents serious issues because there may be extensive liability in the future. Potential plaintiffs who purchased the product after the settlement and are sickened may still file a lawsuit if there is no product warning. Right now, the EPA shows no sign of backing off of its position.
Future Liability Is Still a Concern
There is no way of knowing how many future claims the company may face since it takes approximately ten years for a case of lymphoma to develop after a user was exposed to a carcinogen. This presents a difficulty of funding settlements for future cases. Part of the settlement goes to a fund that would be set aside to settle future claims of liability. However, there is little indication of the size and scope of this future liability.
In addition to lymphoma, product users are at risk of other diseases. There is a known connection to lymphoma, but there may be other diseases that could result from exposure. The uncertainty also makes it difficult to fully fund a future settlement. If the amount of future cases of diseases is not properly estimated or the parties today fail to anticipate future side effects, the settlement fund will not have enough assets in the future. If that is the case, Bayer can continue to remain liable in the future, and the company has no predictability for what may happen years from now. This defeats the purpose of the settlement which is to reduce the company’s present and future risk in a manner that would give the shareholders some peace of mind.
Future liability is also an issue when it comes to new possible plaintiffs. Lawyers have been aggressively advertising these lawsuits, causing the number of plaintiffs to spike. The concern is that they would continue to bring in new plaintiffs who discover that they are sick after the date of the settlement. This could also cause the settlement fund to be overwhelmed and depleted and could lead to future liability for Bayer. The company wants to use this settlement to cap future liability. Accordingly, the sides are negotiating about Bayer’s reported demand to include a provision in the settlement agreement in which plaintiffs’ attorneys are prevented from advertising for more clients after the agreement is signed.
Some Plaintiffs’ Attorneys Are Playing Hardball
In addition, there have been two major holdouts from the settlement negotiations. Some plaintiffs have shown a willingness to settle, while others are taking longer to come around to the possible settlement terms. For now, it seems that the two sides will remain in settlement negotiations. The initial jury verdicts on currently on appeal in California, but there will likely not be a decision in these cases until the latter part of this year.