By Jacob Bunge and Ruth Bender
Bayer AG is stepping up the legal defense of its flagship weed
killer, after a verdict in a recent case alleging the chemical
causes cancer sent shares down sharply and raised the prospect of
costly plaintiff payouts.
Bayer on Tuesday said it wants a California state court judge to
overturn the jury's verdict, order a new trial or reduce damages,
according to a court filing. The company aims to defeat a $289
million award in August in one of the first of thousands of cases
filed by gardeners, farmers and others claiming Bayer's Roundup
herbicide gave them cancer.
The jury in that case ruled unanimously in favor of a former
groundskeeper who sought to hold the maker of Roundup liable for
his non-Hodgkin lymphoma. The verdict came only two months after
the German pharmaceutical and chemical conglomerate sealed its
takeover of Monsanto, the U.S. agriculture giant that invented the
herbicide.
Bayer shares have dropped about 22% since the verdict to
five-year lows. Investors fear a lengthy legal battle and more
damage awards could cost the company billions of dollars. Some have
questioned whether Bayer Chief Executive Werner Baumann properly
evaluated the risks of taking over Monsanto in a 2016 deal valued
at more than $60 billion, the biggest ever by a German company.
Bayer now faces 8,700 plaintiffs in the U.S., up from a few
hundred in the spring of 2016. Bayer has said it expects that
number to grow.
"Werner Baumann must ask himself if Bayer took too lightly the
lawsuits against Monsanto," said Winfried Mathes, a corporate
expert from Bayer shareholder Deka Investment. The share-price drop
has also rattled employees inside the Leverkusen, Germany-based
company, according to people familiar with their thinking.
Mr. Baumann has told investors that Bayer's arguments about
science proving the weed killer's safety will prevail. "We stand
behind the product and the science backing it up," he said on a
conference call in August.
In its filing on Tuesday with the California state court, Bayer
argued that the plaintiff's lawyers relied on flimsy scientific
evidence that doesn't support a link to cancer, and that jurors
were swayed by overly emotional and speculative arguments from the
plaintiff's lawyers.
Pedram Esfandiary, an attorney for Baum Hedlund Aristei and
Goldman PC, which is representing the plaintiff in the case, said
the jury verdict demonstrated that Monsanto's scientific case
wasn't convincing. "I think the odds are very slim of them
prevailing," he said.
Judge Suzanne Ramos Bolanos is expected to rule on Bayer's
requests by late October or early November.
Bayer entered deal talks with Monsanto in 2016 aware of the
problems facing Roundup, people familiar with the negotiations
said. Still, there were legal limits to how much information
Monsanto could share before antitrust officials approved the
merger, Bayer has said.
Representatives for the European Union's competition authority
and the U.S. Department of Justice had no immediate comment.
Bayer first learned of dozens of internal Monsanto emails
discussing glyphosate's safety and strategies to publicly defend it
as part of U.S. court proceedings. Those emails include what
plaintiffs' lawyers say is evidence of Monsanto ghostwriting
articles for outside scientists to defend the chemical's
safety.
After assuming control of Monsanto this summer, Bayer found no
"smoking gun" in Monsanto's internal communications, Mr. Baumann
told investors last month. Lawyers representing cancer victims used
those internal communications "out of context on purpose," he said.
Monsanto's scientists and the article authors denied ghostwriting
allegations, Bayer said.
The deal made Bayer the world's biggest supplier of pesticides
and seeds for farmers, which now generate nearly half of group
sales. Profit margins are slim for Roundup, its top-selling crop
spray, but the bulk of the nearly $11 billion in crop seeds
Monsanto sells annually are genetically engineered to withstand
glyphosate, the potent weed-killing chemical in Roundup.
The International Agency for Research on Cancer, part of the
World Health Organization, in 2015 classified glyphosate as likely
having the potential to cause cancer. Monsanto fought back,
pointing to studies by academics and agencies like the U.S.
National Institutes of Health and Environmental Protection Agency
that showed no cancer risk.
Legal academics said successful challenges to jury verdicts
aren't uncommon. Last October, another California state judge
overturned a $417 million judgment against Johnson & Johnson
after a woman alleged that the company's baby powder contributed to
her developing ovarian cancer.
In January, a judge in Pennsylvania state court overturned a
jury's verdict and $28 million in damages and ruled in Bayer's
favor in a lawsuit alleging the company and Johnson & Johnson
didn't properly warn about internal bleeding risks from the drug
Xarelto.
"For Bayer, the most important thing is to have a judge say the
science doesn't hold up," said Alexandra Lahav, law professor at
the University of Connecticut.
Bayer has sometimes settled product lawsuits. In 2005, Bayer
paid $1.15 billion to settle some 3,000 death and injury claims
over its withdrawn cholesterol-lowering drug Baycol.
The company also spent over $2 billion to settle thousands of
cases claiming it didn't adequately inform women of the risk of
thrombosis and other side effects from its hormone-based
contraceptive pills Yaz, Yasmin and Yasminelle.
Write to Jacob Bunge at jacob.bunge@wsj.com and Ruth Bender at
Ruth.Bender@wsj.com
(END) Dow Jones Newswires
September 18, 2018 22:09 ET (02:09 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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