When Bayer, the giant German chemical and pharmaceutical maker, acquired Monsanto two years ago, the company knew it was also buying the world’s best-known weedkiller. What it didn’t anticipate was a legal firestorm over claims that the weedkiller, Roundup, caused cancer.
Now Bayer is moving to put those troubles behind it, agreeing to pay more than $10 billion to settle tens of thousands of claims while continuing to sell the product without adding warning labels about its safety.
The deal, announced Wednesday, is among the largest settlements ever in U.S. civil litigation. Negotiations were extraordinarily complex, producing separate agreements with 25 lead law firms whose clients will receive varying amounts.
“It’s rare that we see a consensual settlement with that many zeros on it,” said Nora Freeman Engstrom, a professor at Stanford University Law School.
Bayer, which inherited the litigation when it bought Monsanto for $63 billion, has repeatedly maintained that Roundup is safe.
Most of the early lawsuits were brought by homeowners and groundskeepers, although they account for only a tiny portion of Roundup’s sales. Farmers are the biggest customers, and many agricultural associations contend glyphosate, the key ingredient in Roundup, is safe, effective and better than available alternatives.
The settlement covers an estimated 95,000 cases and includes $1.25 billion for potential future claims from Roundup customers who may develop the form of cancer known as non-Hodgkin’s lymphoma.
The company is taking a calculated risk that the benchmark settlement will largely resolve its legal problems. Bayer still faces at least 30,000 claims from plaintiffs who have not agreed to join the settlement.
Werner Baumann, Bayer’s chief executive, said that the two critical conditions for a settlement were that it was financially reasonable and that it would bring closure to the litigation.
“We are totally convinced” this does both, Baumann said in an interview Wednesday. There is money put aside for existing claimants outside of the agreement, he said, and a structure to deal with future claimants that could emerge.
Fletch Trammell, a Houston-based lawyer who said he represented 5,000 claimants who declined to join, disagreed. “This is nothing like the closure they’re trying to imply,” he said. “It’s like putting out part of a house fire.”
But Kenneth R. Feinberg, the Washington lawyer who oversaw the mediation process, said he expected most current claimants to eventually sign on to the settlement.
“In my experience, all those cases that have not yet been settled will quickly be resolved by settlement,” said Feinberg, best known for running the federal September 11th Victim Compensation Fund. “I will be surprised if there are any future trials.”
Bayer said the amount set aside to settle current litigation was $8.8 billion to $9.6 billion, including a cushion to cover claims not yet resolved. It said the settlement included no admission of liability or wrongdoing.
Individuals, depending on the strength of their cases, will receive payments of $5,000 to $250,000, according to two people involved in the negotiations.The coronavirus outbreak, which has closed courts across the country, may have pushed the plaintiffs and the company to come to an agreement.
“The pandemic worked to the advantage of settlement because the threat of a scheduled trial was unavailable,” Feinberg said.
Talks began more than a year ago at the prompting of Judge Vince Chhabria of U.S. District Court in San Francisco, who was overseeing hundreds of federal Roundup lawsuits.
Chhabria appointed Feinberg to lead negotiations for an agreement that would include all the cases, including thousands of others filed in state courts and other jurisdictions.
The $1.25 billion set aside for future plaintiffs will be applied to a class-action suit being filed in Chhabria’s court on behalf of those who have used Roundup and may later have health concerns.
Part of the $1.25 billion will be used to establish an independent expert panel to resolve two critical questions about glyphosate: Does it cause cancer, and if so, what is the minimum dosage or exposure level that is dangerous?
If the panel concludes that glyphosate is a carcinogen, Bayer will not be able to argue otherwise in future cases — and if the experts reach the opposite conclusion, the class action’s lawyers will be similarly bound.
Pressure on Bayer for a settlement has been building over the past year after thousands of lawsuits piled up and investors grew more vocal about their discontent with the company’s legal approach.
Just weeks after the deal to purchase Monsanto was completed in 2018, a jury in a California state court awarded $289 million to Dewayne Johnson, a school groundskeeper, after concluding that glyphosate caused his cancer. Monsanto, jurors said, had failed to warn consumers of the risk.
In March 2019, a second trial, this time in the federal court in San Francisco, produced a similar outcome for Edwin Hardeman, a homeowner who used Roundup on his property, and an $80 million verdict.
Two months later, a third jury delivered a staggering award of more than $2 billion to a couple, Alva and Alberta Pilliod, who argued that decades of using Roundup caused their non-Hodgkin’s lymphoma.
“Plaintiffs have gone to the plate three times and hit it out of the park,” Engstrom at Stanford said. “When you see they’re batting a thousand, and thousands more cases are waiting in the wings, that spells a very bleak picture for Monsanto.”
All three monetary awards were later reduced by judges and Bayer appealed the verdicts, but the losses rattled investors and the stock price tumbled sharply. Those cases are unaffected by Wednesday’s settlement.Glyphosate was introduced in 1974, but its journey to becoming the world’s No. 1 weedkiller gained momentum in 1996 after Monsanto developed genetically modified seeds that could survive Roundup’s concentrated attacks on weeds.
Farmers quickly latched onto the agricultural products to reduce costs and increase crop yields. In the United States, for example, 94% of soybean crops and roughly 90% of cotton and corn now come from genetically altered seeds.
But long-simmering anxieties over possible hazards exploded in 2015 when the International Agency for Research on Cancer, an arm of the World Health Organization, announced that glyphosate could “probably” cause cancer.
Monsanto denounced the findings, arguing that years of research in laboratories and in the field had proved glyphosate’s safety. Regulators in a string of countries in Asia, Australia, Europe and North America have mostly backed Monsanto’s — and now Bayer’s — position.
The longest and most thorough study of American agricultural workers by the National Institutes of Health, for example, found no association between glyphosate and overall cancer risk, though it did acknowledge that the evidence was more ambiguous at the highest levels of exposure.
The Environmental Protection Agency ruled last year that it was a “false claim” to say on product labels that glyphosate caused cancer. The federal government offered further support by filing a legal brief on the chemical manufacturer’s behalf in its appeal of the Hardeman verdict. It said the cancer risk “does not exist” according to the EPA’s assessment.
Then in January, the agency issued another interim report, which “concluded that there are no risks of concern to human health when glyphosate is used according to the label and that it is not a carcinogen.”
This week, a federal judge in California referred to the agency’s pronouncement when it ruled that the state could not require a cancer warning on Roundup, writing that “that every government regulator of which the court is aware, with the exception of the IARC, has found that there was no or insufficient evidence that glyphosate causes cancer.”
Critics have countered that regulators based their conclusions on flawed and incomplete research provided by Monsanto. Several cities and districts around the world have banned or restricted glyphosate use, and some stores have pulled the product off their shelves.
Part of the discrepancy between the international agency’s conclusions and so many other investigators’ findings is related to differences in the questions that were asked and the way the data was selected and analyzed.
The international agency, in essence, was asking whether glyphosate has the potential to cause cancer. Its researchers judged the chemical “probably carcinogenic to humans,” and added it to a list that already included beef, pork, mobile phone use, dry cleaning and working night shifts. Glyphosate escaped a stronger classification — “carcinogenic to humans” — that includes bacon, red wine, sun exposure, tobacco and plutonium.
Government regulators, by contrast, are looking at the risk that glyphosate will actually cause cancer given most people’s levels of exposure. Sharks, for example, are potentially dangerous. But people who stay out of the water are not at much risk of being attacked.
In court, lawyers argued over the available scientific evidence. Perhaps most damaging for the defendants, though, were revelations that reinforced Monsanto’s image as a company that people love to hate.
Monsanto’s aggressive tactics to influence scientific opinion and discredit critics undercut the company’s credibility. It had taken aim at hundreds of activists, scientists, journalists, politicians and even musicians. At one point, a team monitored Neil Young’s social media postings after he released an album, “The Monsanto Years,” in 2015 and a short film that attacked the company and genetically modified food.
“Monsanto didn’t seem concerned at all about getting at the truth of whether glyphosate caused cancer,” Chhabria of the U.S. District Court in San Francisco said when he reviewed the Hardeman verdict last summer.
With Bayer’s purchase in 2018, the Monsanto brand ceased to exist, but the shadows over one of its marquee products persisted.
Bayer announced Wednesday that it would separately spend up to $400 million to settle claims stemming from another Monsanto chemical, dicamba, that can drift after it is sprayed and damage other crops. Bayer also put aside $820 million to settle long-standing lawsuits related to toxic chemicals in the water supply known as PCBs — for polychlorinated biphenyls — that were banned in the United States four decades ago.