(Bloomberg) — The US Supreme Court gave Bayer AG a mixed reception on its bid to stop tens of thousands of lawsuits claiming its Roundup herbicide should have been labeled as a cancer risk.<\/p>\n
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Hearing arguments in Washington Monday, the justices weighed a $1.25 million jury verdict won by a Missouri man who blamed Roundup for his non-Hodgkin lymphoma. The company contends that since US regulators didn\u2019t require a cancer warning, federal law bars the Missouri suit and others like it.<\/p>\n
Bayer drew supportive comments from Justice Brett Kavanaugh, who questioned whether lawsuits alleging a failure to warn could be squared with a provision in federal law requiring \u201cuniformity\u201d in herbicide labels. But Chief Justice John Roberts suggested that states considering new evidence that a product is risky should be allowed to \u201ccall this danger to the attention of the people.\u201d<\/p>\n
Bayer shares slumped as much as 6.5% in early trading Tuesday in Frankfurt. The stock had gained 67% over the past year through Monday\u2019s close on optimism about containing the Roundup fallout and progress in its pharmaceutical pipeline.<\/p>\n
Bank of America Corp. analysts including Sachin Jain said the hearing was less clear cut in Bayer\u2019s favor than expected. They cited feedback from a call with a legal expert, who still expects the ruling to favor Bayer with 70% probability.<\/p>\n
\u201cFor Bayer, everything is at stake,\u201d said Markus Manns, portfolio manager at Frankfurt-based asset manager Union Investment, a Bayer investor. \u201cWithout a victory before the Supreme Court, the settlement with the plaintiffs offers no reliable protection against future lawsuits.\u201d<\/p>\n
Bayer is looking to put an end to litigation that has cost the company more than $10 billion and depressed its stock price. A ruling favoring the German company could also help the medical-device, cosmetic and food industries, which are governed by laws similar to the one at the center of the Bayer case. The court will rule by early July.<\/p>\n
Bayer contends that federal law supersedes, or \u201cpreempts,\u201d traditional state-law claims for failure to warn. The case centers on the Federal Insecticide, Fungicide, and Rodenticide Act, which sets out rules for pesticides including the requirement of an adequate label. FIFRA, as the law is known, also says that states can\u2019t impose additional mandates.<\/p>\n
Bayer says the latter provision means that once the Environmental Protection Agency approved Roundup\u2019s mandatory label without requiring a cancer warning, the company can\u2019t be sued for not having one. The company, which has the Trump administration\u2019s backing in the case, has steadfastly maintained Roundup is safe and doesn\u2019t cause cancer.<\/p>\n
Lawyers for the plaintiff, John Durnell, say EPA\u2019s determinations don\u2019t preclude state courts from making their own judgments about the need for a warning.<\/p>\n
Cutting Across<\/p>\n
The questioning Monday cut across the usual ideological lines. The Republican-appointed Roberts questioned the notion that states worried about cancer risks should have to wait for the EPA to decide whether to require a label change.<\/p>\n
\u201cIf it turns out that they were right, it might have been good if they had an opportunity to do something to call this danger to the attention of the people while the federal government was going through its process,\u201d Roberts said.<\/p>\n
But liberal Justice Elena Kagan suggested that EPA\u2019s judgment shouldn\u2019t be overridden lightly. She said Congress entrusted EPA with the duty of evaluating the costs and benefits of warning labels and reassessing its decisions in light of new information.<\/p>\n
\u201cThere just seems like a lot of stuff that the EPA does and is told by Congress to do to ensure the appropriateness of a particular pesticide,\u201d Kagan said.<\/p>\n
Kagan also said the preemption provision was \u201cclearly designed to achieve uniformity in labeling.\u201d When Durnell\u2019s lawyer, Ashley Keller, said lawsuits wouldn\u2019t undercut that uniformity, he drew pushback from Kavanaugh.<\/p>\n
\u201cThe label\u2019s illegal in one state and legal in another state,\u201d Kavanaugh said. \u201cThat\u2019s uniformity?\u201d<\/p>\n
Keller told the justices that lawsuits were an important supplement to EPA requirements because \u201cthings slip through the cracks with that agency.\u201d<\/p>\n
Bayer\u2019s lawyer, Paul Clement, argued that allowing lawsuits \u201cwould open the door for crippling liability and undermine the interest of farmers who depend on federally registered pesticides for their livelihood.\u201d<\/p>\n
Bayer said in a statement Tuesday that a favorable ruling \u201cwould provide essential regulatory clarity for companies that seek to bring currently approved and new products to market, addressing their ability to serve US farmers and consumers.\u201d<\/p>\n
MAHA Demonstrators<\/p>\n
President Donald Trump has embraced glyphosate, the active ingredient in Roundup, moving in February to ramp up domestic production. The administration\u2019s stance has angered many members of the Make America Healthy Again movement, who have pushed to get glyphosate out of the food system.<\/p>\n
About 200 demonstrators gathered near the front steps of the Supreme Court Monday morning to voice their opposition to glyphosate and the prospect of legal protections for Bayer.<\/p>\n
\u201cYou cannot tell Americans to eat real food while protecting the cancer-causing chemicals sprayed on it,\u201d said Vani Hari, known as the Food Babe, referring to Health Secretary Robert F. Kennedy Jr.\u2019s \u201cEat Real Food\u201d push, which accompanied an overhauled dietary guidelines this year. She added that \u201cwe wouldn\u2019t be here right now if President Trump didn\u2019t sign that executive order.\u201d<\/p>\n
Other protesters held signs proclaiming \u201cNo Immunity for Poison\u201d and \u201cFarmers and Families Deserve Better than Poison\u201d at the rally.<\/p>\n
Various farm, business and nonprofit groups filed briefs in support of Bayer, arguing that a uniform standard is better than a patchwork of state rules.<\/p>\n
Durnell\u2019s supporters include consumer and food-safety advocates who say the EPA review process is inadequate because of loopholes, data gaps and corporate influence over the agency.<\/p>\n
Bayer recently reserved $11.25 billion (\u20ac9.6 billion) to deal with as many as 65,000 outstanding suits, according to the company\u2019s securities filings.<\/p>\n
Bloomberg Intelligence analyst Holly Froum estimated in a note that about $787 million in existing Roundup verdicts could be affected by the Supreme Court case and, if the justices rule for Bayer, \u201cit would eliminate plaintiffs\u2019 strongest claim.\u201d<\/p>\n
The case is Monsanto v. Durnell, 24-1068.<\/p>\n
–With assistance from Sonja Wind, Jef Feeley, Kristina Peterson, Joe Easton and Iain Rogers.<\/p>\n
(Updates with analyst comment, shares starting in fourth paragraph.)<\/p>\n
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