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Last Wednesday, Bayer announced it will pay between $10.1 and $10.9 billion to resolve current and address potential future Roundup™  litigation. The agreement will bring closure to approximately 75% of the current Roundup™ litigation involving approximately 125,00 filed and unfiled claims overall, many of which claim Roundup™’s active ingredient, glyphosate, caused them to develop cancer. The company will pay $8.8 billion to $9.6 billion to resolve current Roundup™ litigation and unresolved claims, with $1.25 billion set aside to address potential future litigation. Those participating in the settlement will be required to dismiss their cases or agree not to file. The agreements contain no admission of liability or wrongdoing on the part of Bayer. (Roundup™ was developed by Monsanto, which Bayer bought in 2018 for $63 billion, according to NPR).

The company said that before deciding to settle, it considered the alternative course of continuing to fight Roundup™ cases. In the company’s risk assessment, potential negative outcomes of further litigation—including more advertising and growing numbers of plaintiffs, upwards of 20 trials per year with uncertain jury outcomes, and associated reputation and business impacts—would likely exceed the settlement substantially.

Roundup™

Werner Baumann

The resolutions were approved unanimously by Bayer’s Board of Management and Supervisory Board with input from its Special Litigation Committee. “First and foremost, the Roundup™ settlement is the right action at the right time for Bayer to bring a long period of uncertainty to an end,” said Werner Baumann, Chief Executive Officer of Bayer. “It is financially reasonable when viewed against the significant financial risks of continued, multi-year litigation and the related impacts to our reputation and to our business. The decision to resolve the Roundup™ litigation enables us to focus fully on the critical supply of healthcare and food. It will also return the conversation about the safety and utility of glyphosate-based herbicides to the scientific and regulatory arena and to the full body of science.”

A Class Science Panel

Potential future cases will be governed by a class agreement subject to court approval. The agreement includes creation of an independent Class Science Panel (CSP) which will determine whether Roundup™ can cause non-Hodgkin’s lymphoma (NHL), and if so, at what minimum exposure levels. (The materials considered by the CSP that Bayer has permission to disclose or are public information will be posted on a public website.) Both the class and company will be bound by the CSP’s determination, which is expected to take several years. In the meantime, class members will not be permitted to proceed with Roundup™ claims and cannot seek punitive damages. The agreed funding is capped at the aforementioned $1.25 billion and will support research into treatment of NHL, NHL diagnostic programs in underserved areas, and assistance payments to class members who develop NHL before the CSP’s determination and are eligible on a need basis.

Cash payments are expected to start this year. Currently, Bayer is anticipating the potential cash outflow will not exceed $5 billion in 2020, $5 billion in 2021, and the remaining balance would be paid in or after 2022.

The three cases that have gone to trial – Johnson, Hardeman and Pilliod – will continue through the appeals process and are not covered by the settlement. Bayer will continue these cases since the appeals will provide legal guidance going forward. In an appellate court filing, the U.S. government expressed its support for the company’s assertion that state law warning claims conflict with U.S. federal law, which require no cancer warning, and must be dismissed. Last week, a federal judge in California found that scientific evidence does not support the state’s Proposition 65 cancer warning requirement for glyphosate-based herbicides.