Bayer denies allegations that glyphosate, the world’s most widely used weed-killer, causes cancer and said it would appeal the verdict if necessary.
The jury awarded $39 million in compensatory damages and $250 million in punitive damages to school groundskeeper Dewayne Johnson, who was diagnosed with non-Hodgkin’s lymphoma, a cancer of the lymph system, in 2014.
Here are details of the U.S. litigation over glyphosate and an outline of the appeals process in the case.
What is the significance of this case?
It marks the world’s first jury verdict in a lawsuit alleging that glyphosate causes cancer. The decision sent Bayer shares sliding, with the stock continuing to trade more than 20 percent below its Aug. 9 value.
By the end of July, Bayer’s Monsanto unit faced 8,000 glyphosate lawsuits in United States federal and state courts, some of which could go to trial before year-end or in early 2019.
Many investors in Bayer, which bought Monsanto for $63 billion this year, were caught off guard by the ruling and analysts continue to assess the deal’s legal risks.
What are the scientific arguments?
Monsanto denies that its glyphosate products can cause cancer, saying decades of scientific studies have shown the weed-killer to be safe for humans.
The U.S. Environmental Protection Agency in September last year concluded the chemical was probably not carcinogenic to humans, and the European Union in 2017 also extended the license for use of glyphosate for five years after a heated debate.
But the cancer division of the World Health Organization in 2015 concluded glyphosate was “probably carcinogenic to humans,” and plaintiffs have widely cited that finding.
At the center of Bayer’s defense is the U.S. government-backed November 2017 Agricultural Health Study. The largest human study on pesticides published, it found no statistically significant link between glyphosate and cancer in about 57,000 U.S. agricultural workers observed since the early 1990s.
But plaintiffs in the litigation question the validity of the study, saying there were problems with it methodology that caused glyphosate exposure to be underestimated.
What is at stake for Bayer?
Bayer said in an Aug. 23 call with analysts it did not expect any short-term effects from the Johnson verdict on glyphosate sales. Though it does not break out that figure, it said glyphosates are a significant portion of revenue from its agricultural productivity segment, which was $3.7 billion in 2017.
But analysts questioned whether Bayer had underestimated legal risks in its Monsanto acquisition.
Berenberg analyst Alistair Campbell said resolving the issue could cost Bayer $5 billion, citing a rough estimate based on past product liability settlements such as Merck & Co Inc’s $4.9-billion settlement over painkiller Vioxx or Bayer’s $4.2-billion total settlement over the Baycol cholesterol drug.
The company has only set aside provisions for legal defense costs, not damages.
How will Bayer appeal the verdict?
If Judge Bolanos denies its post-trial motion, Bayer has said it will file an appeal, which could take the case to California’s Supreme Court and eventually the U.S. Supreme Court.
Bayer’s first appeal would be to the California superior court’s appellate division. The company said it would argue an evidentiary ruling issued in May wrongly allowed Johnson’s expert witnesses to testify in front of the jury.
It said the trial judge also wrongly allowed lawyers and experts for Johnson to “inflame” jurors with statements aimed at casting Monsanto in a bad light.
Legal experts say Bayer’s appeal could face an uphill climb.