Bayer Gets Leg Up in Case Over Weedkiller -- WSJ

By Ruth Bender and Donato Paolo Mancini

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 5, 2019).

BERLIN -- Bayer AG shares rose by more than 6% Friday after the German chemicals company scored a court victory in the run-up to jury trials over whether Monsanto Co. weedkillers can cause cancer.

Bayer closed its $63 billion takeover of Monsanto last year, inheriting the St. Louis-based company's Roundup weedkillers as well as potential legal liabilities.

U.S. District Judge Vince Chhabria granted a request late Thursday from Bayer to stagger the submission of evidence in so-called bellwether trials, potentially limiting the evidence presented by the plaintiff's lawyers to the jury. Bellwether cases are selected to test arguments and gauge possible recoveries for other similarly situated plaintiffs in an attempt to reach a large-scale resolution.

The judge's approval for "bifurcation" essentially splits the trial into two phases. Now lawyers for the plaintiff in the first bellwether case must demonstrate that the chemical glyphosate in the weedkillers caused his cancer before they can present evidence that manufacturer Monsanto acted with malice.

The case of Edwin Hardeman, a California resident who developed non-Hodgkin lymphoma, is set to go to trial in February. He is one of 1,654 plaintiffs nationwide whose cases have been consolidated in this multidistrict litigation.

Thursday's court ruling represents a small success in Bayer's efforts to focus the proceedings on the science behind claims that glyphosate can cause non-Hodgkin lymphoma, which it denies. The company has argued that a previous jury verdict that went against Monsanto was overly based on emotion.

"We welcome the court's decision to focus the trial on the extensive scientific findings that are relevant for human health and confirm the safety of glyphosate," Bayer said in a statement. "It's an encouraging signal and a step toward a rationalization of the discussion."

Bayer has vigorously defended its recently acquired weedkillers ever since a San Francisco jury in August found that the Monsanto products were responsible for causing a man's cancer and that Monsanto knew or should have known of potential risks and failed to warn consumers.

Bayer has repeatedly pointed to scientific evidence and regulatory decisions that established glyphosate was safe to use.

That court decision, weeks after Bayer completed its acquisition of Monsanto, sent Bayer's shares plummeting as investors grew concerned about the legal exposure the company had inherited. Since that time Bayer has shed more than 30% of its market capitalization.

Analysts and investors will be closely watching the coming trials for clues about the outcome and the scale of the potential costs for Bayer.

The first federal court trial, with Mr. Hardeman as plaintiff, will kick off on Feb. 25 before the U.S. District Court for the Northern District of California. Thursday's order applies to that proceeding and two other bellwether trials set to start later in 2019.

"This is a reasonably significant development, in our view, because this was not done in the first case that Bayer lost, where the jury was presented with evidence that will now only be allowed in phase two," UBS analyst Michael Leuchten said in research note.

Judge Chhabria said that while a bifurcation order in court trials is unusual and should be granted with caution, it was warranted in this case. He said a significant portion of the plaintiff's argument involves attacks on Monsanto for attempting to influence regulators and manipulate public opinion.

While such actions if substantiated could expose the company to punitive damages and liability, their discussion would be a distraction when trying to establish whether glyphosate caused the plaintiff's disease, the judge said.

"We want you focusing on the science," Judge Chhabria told an attorney for the plaintiffs during a hearing Friday, not "mischaracterizing statements Monsanto executives have made" -- something the judge said the attorney did Friday.

Aimee Wagstaff of Andrus Wagstaff, one of the co-lead counsel in the consolidated federal case against Bayer, said the bifurcation order wouldn't change the scientific evidence, which she says remains in plaintiffs' favor.

"We are ready to take this case to trial," Ms. Wagstaff said in an email. "We are confident the jury will learn the truth and give Mr. Hardeman the justice he deserves," she said.

--Sara Randazzo contributed to this article.

Write to Ruth Bender at Ruth.Bender@wsj.com

(END) Dow Jones Newswires

January 05, 2019 02:47 ET (07:47 GMT)

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