BAYN Bayer AG

By Sara Randazzo 

A federal judge cast doubt on Bayer AG's proposal to neatly resolve all future lawsuits over the safety of its Roundup weedkiller, potentially snagging the German company's attempts to move past the massive liability.

Bayer said recently it would pay up to $10.9 billion to settle tens of thousands of current Roundup cases and create a system for handling future cases. The deal came after three juries in recent years awarded large verdicts to plaintiffs alleging Roundup caused non-Hodgkin lymphoma, spooking investors.

But with Roundup still being sold and no plans to change the label or active ingredients, settling the litigation isn't as easy as paying those who have already sued. Bayer proposed a novel type of class action to capture all future claims, which would be guided by the conclusions of a court-approved panel of scientists chosen to study Roundup's potential carcinogenicity.

U.S. District Judge Vince Chhabria in San Francisco, who must approve the class action, said Monday he was skeptical of the plan and likely to reject the idea. In a four-page order refusing to delay a July court hearing in the case, he questioned "whether it would be constitutional (or otherwise lawful)" to hand the issue to a panel of scientists instead of judges and juries.

The company's shares fell by 5% Tuesday in Europe.

"In an area where the science may be evolving, how could it be appropriate to lock in a decision from a panel of scientists for all future cases?" the judge wrote. Bayer had proposed giving the panel four years to study existing research on whether Roundup and its active ingredient, glyphosate, cause cancer.

Meanwhile, no one could bring new Roundup lawsuits, and if the panel found the weedkiller to be safe, it would essentially shut down any future cases. If the panel concluded Roundup was dangerous at certain exposure levels, lawsuits could go ahead, but those suing couldn't seek any punitive damages.

The judge said he also found it "dubious" that news of the class action could possibly reach all farmer workers, gardeners and other Roundup users who haven't gotten cancer yet and may want to sue.

Judge Chhabria said a July 24 hearing will go ahead, nothing that "if the parties are going to need to move to Plan B, they would presumably prefer to do that sooner rather than later."

Bayer said Tuesday: "We appreciate the Judge's order raising his preliminary concerns with the proposed class settlement, which we take seriously" and will address at the hearing.

"Shareholders want finality, they want certainty, they want the Roundup ordeal to be over," said Tom Claps, an analyst at Susquehanna Financial Group. At the same time, he said, "investors have always known there's no neat bow and ribbon that they could wrap up around future claims to provide full closure for the company." Mr. Claps said the company could try to tweak the proposal to meet the judge's approval, but that it appeared unlikely to go through otherwise.

Bayer had proposed setting aside $1.1 billion as part of the class action, to go toward tools to diagnose non-Hodgkin lymphoma and relief payments to low-income plaintiffs. Another $150 million would go toward attorneys' fees.

Bayer inherited the Roundup litigation in its 2018 acquisition of U.S. agricultural giant Monsanto Co. The recent settlement of existing cases, which doesn't need a court's approval, will cost the company between $8.8 billion and $9.6 billion.

Write to Sara Randazzo at sara.randazzo@wsj.com

(END) Dow Jones Newswires

July 07, 2020 13:28 ET (17:28 GMT)

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