See you in court

Bayer takes on legal risk in US trial of Monsanto’s glyphosate herbicide

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You reap what you sow. Source: Reuters

A test case claiming Monsanto’s weed killer, Roundup, causes cancer opened in a San Francisco court Monday. It could be one of several that eventually lead to a class-action case against the herbicide, which is based on glyphosate. The suit may expose Monsanto’s new German owner, Bayer, to billions in legal liabilities.

Glyphosate has been controversial for years. The World Health Organization categorizes it as “probably cancer-causing,” but Monsanto has defended its bestselling weed killer with an array of studies questioning that link. Bayer was well-aware of the risk when it acquired Monsanto, but felt that it was manageable.

However, this test case, Johnson v. Monsanto, involves a pest manager for a county school system in California who is dying of non-Hodgkins lymphoma he believes was caused by his contact with Roundup in the course of his work. There are more than 4,000 similar lawsuits in the works, legal experts estimate.

Glyphosate is widely used around the world despite the controversy. The European Union last year renewed its license for use in Europe for another five years. However, Germany’s new grand coalition government, which took office in March, pledged to limit its use, though no action has been taken as of yet.

Bring it on

Bayer completed its acquisition of Monsanto this month after several months of arduous negotiations with antitrust authorities around the world, agreeing to several divestitures so that it could acquire the US-based firm. The combination is now the world’s largest producer of agrochemicals and seeds.

Legal liability is nothing new to chemical firms. Bayer, like Monsanto, maintains a large legal staff and budgets hundreds of millions for litigation costs each year. Monsanto has reserved about $250 million (€215 million) for court cases. But these costs can run much higher, as Bayer knows from settling more than 10,000 cases involving its birth control pill Yasmin for $2.1 billion. The pill played an alleged role in causing thrombosis.

But analysts believe Bayer has a good chance of prevailing on most of its glyphosate cases. “The plaintiffs don’t have much scientific evidence that there is a connection between Roundup and cancer,” said Jonas Oxgaard, an equities analyst at Sanford C. Bernstein.

Test cases may lead to class-action lawsuit

Filing class-action suits has gotten more difficult, even in the US. Usually a number of test cases gauge what kind of verdicts are possible. Plaintiffs were eager to have the first test case in California because liberal juries often tend to favor the accuser. But Bayer officials are confident the juries will come to the conclusion that glyphosate is not hazardous to health when used as directed.

Some legal experts feel the German firm is taking things too lightly. “With so many lawsuits, it’s unlikely that Monsanto wins all of them,” said Steven Tapia, a former corporate lawyer who now teaches at the Seattle University School of Law. If the cases are running against them, the company will hurry to settle, which can run into the billions.

In Germany, the coalition government is moving slowly to fulfill its pledge. It cannot fully ban glyphosate after the EU has approved it, but it can restrict its use. One compromise would ban its use in public parks and sports fields, and even in private gardens unless applied by professionals. Farmers would also be restricted.

But Bayer argues that forbidding glyphosate would force farmers to use a cocktail of products, many of which might be worse hazards than Roundup, both for crop output and human health.

Bert Fröndhoff heads up coverage of chemicals, healthcare and services for Handelsblatt. Katharina Kort is a US correspondent. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the authors: froendhoff@handelsblatt.com and kort@handelsblatt.com.

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