Bayer to Pay More Than $ 10 Billion to Resolve Monsanto Litigation

The German company will seek to resolve current lawsuits and address potential future glyphosate-related legal processes.

German chemistry and pharmaceuticals Bayer announced this Wednesday a series of agreements that will resolve important pending Monsanto litigation, including product liability judgments Roundup in the US, the dicamba dispersal processes and PCB litigation in water.

The main feature is the Roundup resolution in the USA, which will close approximately 75% of current Roundup litigation, which represent approximately 125,000 lawsuits filed and not filed in total, according to the company.

The settled lawsuits include all of the plaintiff law firms leading the federal multi-district Roundup litigation or the California representative cases selected for trial, and those representing 95% of the cases currently ready for trial, and setting values ​​and parameters key to guide the resolution of the remaining claims as negotiations progress.

Also, the resolution sets in motion a mechanism to efficiently resolve possible future demands. The company will make a payment of $ 8.8 billion to $ 8.6 billion to resolve Roundup’s current litigation, including an allocation expected to cover unresolved claims and $ 1.25 billion to support a separate collective agreement, in order to address potential future litigation.

The Roundup collective agreement will be subject to the approval of Judge Vince Chhabria of the US District Court. for the Northern District of California. The resolutions were unanimously approved by Bayer’s Board of Directors and the Supervisory Board with input from its Special Litigation Committee. The agreements do not contain the admission of responsibility or irregularity.

“First and foremost, the Roundup deal is the right thing at the right time to end a long period of uncertainty for Bayer,” said Werner Baumann, Chairman of the Bayer Executive Committee (CEO).

This solves most current claims and puts in place a clear mechanism for managing risks of potential future litigation.. It is financially reasonable when compared to the significant financial risks of ongoing multi-year litigation and the associated impacts on our reputation and business. The decision to resolve the Roundup ™ litigation allows us to fully focus on providing health and nutrition. In addition, it will return the conversation about the safety and usefulness of glyphosate-based herbicides to the regulatory arena and to the entire arena of science. ”

“The Roundup agreements are designed as a constructive and reasonable resolution to a single dispute,” said Kenneth Feinberg, ex-officio mediator for the agreement talks.

The separate and independent settlements of the current lawsuits are unique and an acknowledgment to Bayer. The significant progress made to date, which exceeds the initial participation rates of other lawsuit resolution procedures, provides a strong structure that will allow the parties to bring the current Roundup ™ litigation to a close in due course.

Roundup dispute resolution

Roundup multi-step resolution includes several elements. The settlements will resolve the vast majority of current US federal and state court litigation, including both lawsuits filed and parties who have hired attorneys but have not yet filed lawsuits in court.. Those included in the agreement will be required to dismiss the cases or agree not to present them.

The range of US $ 8.8 billion to US $ 9.6 billion covers both agreements already signed and those that are under negotiation.

It also reflects the fact that the number of claimants who are eligible to receive compensation under these settlements will not be known until the claims process is underway. The claims still subject to negotiation largely consist of cases generated by TV advertising and for which the plaintiffs ‘law firms have provided little or no information about their clients’ medical condition, and / or cases represented by law firms. attorneys with very few cases.

The Roundup herbicide sparked litigation in the United States.

The three cases that have gone to trial – Johnson, Hardeman and Pilliod – will continue through the appeals process and will not be covered by the settlement. It is important for the company to continue these cases as appeals will provide future legal guidance.

In an appeal court, the US government expressed specific support for the company’s arguments, stating that the state law warning claims in the Roundup litigation conflict with US federal law, which does not require the inclusion of a cancer warning, and must be discarded.

“This week, a California federal judge has deemed that the scientific evidence does not support that state’s Proposition 65 requirement to include a cancer warning for glyphosate-based herbicides, a decision that reinforces the company’s arguments in the trial, “Bayer said in a statement.

Possible future cases will be governed by the collective agreement that is subject to judicial approval. The settlement includes establishing a pool of potential future claimants and creating an independent Collective Settlement Scientific Panel.

He Scientific Panel of the Collective Agreement will determine whether Roundup can cause non-Hodgkin’s lymphoma (NHL), and if so, at what minimum exposure levels. Materials that are reviewed by the Collective Agreement Scientific Panel that Bayer has permission to disclose or that are in the public domain will be posted on a publicly accessible website.

Both the plaintiffs and the company will be subject to the ruling of the Scientific Panel on this issue of general causality, removing this decision from the jury environment and returning it to the hands of expert scientists.

If the Scientific Panel determines that there is no causal connection between Roundup and the LNH, the members of the joint lawsuit may not claim otherwise in any future litigation against the company.. The resolution of the Scientific Panel is expected to take several years.

Members of the joint lawsuit will not be allowed to proceed with lawsuits against Roundup ™ prior to the Scientific Panel’s resolution, and cannot claim punitive damages. The agreed funding is limited to $ 1,250 million and will support research on the treatment of NHL, NHL diagnostic programs in neglected areas and coverage of assistance to members of the joint lawsuit who develop NHL prior to the determination. of the Scientific Panel of the Joint Agreement and are eligible based on the need for assistance during that period.

The company said that before deciding to reach a settlement, it considered the option of continuing to litigate the Roundup ™ cases. In the company’s risk assessment, the possible negative results of additional litigation, including more advertising and an increasing number of plaintiffs, more than twenty trials per year and uncertain jury results, and the impacts associated with reputation and business, would likely exceed substantially the agreement and related costs.

“Taking into consideration the different options, I am convinced that this plan provides a comprehensive and reasonable solution to the complex and controversial problems presented by this litigation,” said attorney John Beisner, advisor to the Bayer Supervisory Board, expert in class action lawsuits. who leads Skadden, Arps, Slate, Meagher & Flom LLP’s Mass Torts, Insurance and Consumer Litigation Practice Group.

With the support of our external advisor, John Beisner and the Litigation Committee, the Oversight Committee has closely followed the Roundup litigation as well as the dicamba litigation and PCB litigation and has advised the Steering Committee on these matters. The Supervisory Board agrees unanimously with the Board of Directors that these three agreements have been taken in the best interest of our company and our stakeholders, “said Norbert Winkeljohann, Chairman of the Bayer Supervisory Committee.

Baumann added: “Our company is founded on the well-being of our clients. As a science-based company committed to improving people’s health, we have great sympathy for anyone suffering from an illness, and we understand that they seek answers.

“At the same time, the robust body of scientific knowledge indicates that Roundup does not cause cancer, and therefore is not responsible for the diseases alleged in those litigation. We strongly support our glyphosate-based herbicides, which are among the most rigorous products studied from their class and four decades of science support their safety and that they are not carcinogenic, “he added.

In fact, in its Provisional Registry Review Decision, issued in January, the US Environmental Protection Agency (EPA). USA It concluded precisely that “it did not identify any risk to human health from exposure to glyphosate.”

Clients, including farmers and other professionals who depend on glyphosate-based herbicides for their livelihood, will see no change in Roundup availability as a result of the Roundup deals announced Wednesday.

Meanwhile, Bayer says it is committed to offering customers more options and announced last year the investment of approximately € 5 billion over the next few years to develop additional methods for weed management as part of an integrated approach to sustainable agriculture.

Dicamba dispute resolution

Bayer has also announced a collective agreement to resolve the aforementioned dispute over dicamba dispersal involving alleged damage to crops. The company will pay a total of $ 400 million to settle the pending multi-district lawsuit in the US District Court. For the Eastern Missouri District and claims for the 2015-2020 crop year. For the purpose of collecting, claimants will be required to submit evidence of damage to crop yield and evidence that it was due to dicamba.

The company expects a contribution from its co-defendant, BASF, in this settlement.

The only dicamba dispersal case to go to trial – Bader Farms – is not included in this resolution. The company believes the Bader Farms verdict is inconsistent with the evidence and the law and will continue with the post-trial motions. [recursos judiciales] and an appeal, if necessary.

Bayer strongly supports the safety and usefulness of the XtendiMax ™ herbicide with VaporGrip ™ technology and continues to enhance training and education efforts to ensure that producers use these products successfully. The company is solving pending dicamba dispersal cases to focus on the needs of its customers.

PCB Litigation Resolution

Bayer also announced a series of agreements to resolve cases that account for the majority of the company’s litigation regarding PCB exposure. [en agua]. Monsanto legally manufactured PCBs until production ceased in 1977. An agreement establishes a community that includes all local governments with permits from the North American environmental agency (EPA) that involve water discharges damaged by PCBs.

Bayer will pay a total of $ 650 million to those plaintiffs, which will be subject to court approval.

At the same time, the company has signed separate agreements with the Attorneys General of New Mexico, Washington and the District of Columbia to resolve similar PCB lawsuits. For these agreements, which are independent of the collective agreement, Bayer will make payments that together will total USD $ 170 million.

Funding source from free cash flow and divestment from the Animal Health division

Payments related to the deals are expected to begin in 2020. Bayer currently assumes that the potential cash outflow will not exceed $ 5 billion in 2020 and $ 5 billion in 2021; the remaining balance would be paid in 2022 or later.

In order to finance these taxable payments, Bayer may make use of existing surplus liquidity, future free cash flows, proceeds from the divestment of the animal health division and an additional bond issue that will provide flexibility in the management of the payments of the agreements, as well as the next maturities of debt.

Based on the company’s rating agency publications and communication with them, Bayer expects to maintain investment grade credit ratings. With its strong underlying business, the company intends to maintain its dividend policy. At the same time, deleveraging the balance sheet remains a high priority.

“As we work to get past this important litigation, Bayer can set a course for the future and address the global challenges we face in both health and nutrition, not only now in dealing with the COVID-19 pandemic, but also in the long term, as we work to improve quality of life for a growing and aging population of approximately 10 billion people by 2050, “said Baumann.

“More than 100,000 people put their energies into realizing our vision of ‘Health for All, Hunger for Nobody’ with medicines and agricultural products. We believe that science and innovation will be fundamental for the future, just as they have been for Bayer in serving clients and patients for almost 160 years, “added the manager.

And he completed: “We are committed to addressing these challenges in a responsible manner, both to help meet the United Nations sustainable development goals and to maintain transparency and constructive engagement with stakeholders, which is essential to maintaining public confidence. in our products and in our company. “

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