(Bloomberg) – Bayer AG has made verbal agreements to settle a significant portion of the estimated 125,000 US cancer lawsuits related to the use of its Roundup weed control, according to people familiar with the negotiations.
The contracts, which are yet to be signed and cover an estimated 50,000 to 85,000 lawsuits, are part of a $ 10 billion Bayer plan to end an expensive litigation that the company inherited from the Monsanto acquisition in 2018. While some lawyers are still pending, case payments will range from a few million dollars to a few thousand, said people who asked not to be identified because they were not authorized to speak publicly.
Bayer is expected to announce the settlements in June, which must be approved by the Supervisory Board, said those familiar with the negotiations. None of the contracts are signed, although plaintiffs’ lawyers are expected to do so on the day of the announcement.
On Monday at 11:10 a.m., the share rose by 8.2% in Frankfurt trade.
Overcoming the roundup drama is a top priority for CEO Werner Baumann, who coordinated the $ 63 billion acquisition of Monsanto and has since suffered from the legal ramifications. The rise in Roundup claims and three major losses before US courts detracted from the company’s stock, wiped tens of billions of dollars from its market value, and prompted shareholders to give Baumann an unprecedented reprimand last spring.
But since last summer, the CEO has kept the company away from further lawsuits while attending high-level mediation talks. Last month, it won the 93% annual vote of confidence as there were signs that Bayer could find a solution soon.
“Settling all US lawsuits over $ 10 billion should be an important trigger for Bayer’s share price,” said Markus Mayer, an analyst at Baader Bank, on Monday via email.
As soon as a decision is made, Baumann must demonstrate that his strategy of combining pharmaceuticals, consumer health and agriculture makes sense. Some investors have doubts about the approach.
Bayer declined to comment on the details of the talks. Chris Loder, a US-based spokesman, said Friday the company had made “progress in mediations” that resulted from lawsuits. “The company will not speculate on payroll results or timing,” said Loder in an emailed statement. “As we said earlier, the company will consider a solution when it is financially appropriate and will provide a process for resolving potential future litigation.”
Read more: Bayer’s roundup challenge is to avoid awarding the prize to the “Nuclear” jury
Although the exact number of settlements was not immediately clear, the estimate of at least 125,000 claims is more than twice the number of round-up litigation cases previously disclosed by Bayer. The company has only confirmed submitted and delivered cases of approximately 52,500 as of April. Another ten thousand are held by the plaintiffs’ lawyers under agreements with Bayer, the people familiar with the negotiations said. Roundup’s chief mediator Ken Feinberg said in January that the total was 85,000 and would likely increase.
According to some people familiar with the settlements, Bayer will provide $ 8 billion to resolve all current cases, including those that are absent. The deals to date include many of the strongest claims against the company, people said. It is unclear how much would go to those who have now settled and what is left for the holdouts. An additional $ 2 billion will be made available for future suits that link the weed control to non-Hodgkin’s lymphoma, the people familiar with the talks said.
Still being sold
Under the terms of the contracts, Roundup will continue to be sold in the US for use in backyards and farms without a security warning, and plaintiffs’ lawyers will agree to stop accepting new cases or advertise new customers. Since some of the Roundup cases are being consolidated before US District Judge Vince Chhabria in San Francisco, he may need to approve the cases that lie before him.
With tens of thousands of cases still unresolved, there is no guarantee that the company will stay within the $ 8 billion it has budgeted for lawsuits filed and held back. Bayer complicated the matter last month by pulling out of business and demanding lawyers taking less time due to losses related to the Covid 19 pandemic. That could cause more lawyers to take their cases out of the settlement, people said.
Feinberg, the Washington-based lawyer used by Chhabria to oversee the settlement negotiations, said last week that he was “still cautiously optimistic that a national agreement would be reached.” He admitted that the effects of Covid-19 slowed the momentum of the talks.
The settlements are said to resolve allegations that Roundup, the active ingredient of which is chemical glyphosate, has caused non-Hodgkin’s lymphomas in some users. The company denies that Roundup or glyphosate causes cancer, a position supported by the United States Environmental Protection Agency. After Bayer’s court losses led to an increase in new lawsuits, investors such as Elliott Management Corp. the company to reach a comprehensive agreement.
Feinberg dispatched mediators to oversee meetings between Bayer lawyers and individual plaintiffs who only negotiated on behalf of their clients. The company has developed various payout plans, though none will exceed three years, people said.
At this point, only a handful of lawyers can withstand higher payouts, people said. James Onder, a St. Louis-based lawyer who handles more than 24,000 roundup cases, said last week that he had rejected settlement offers that would only bring his clients $ 5,000 each.
Bayer’s overtures “were offensive,” Onder said in an interview. The company is trying to “get the weakest in our society to accept tiny settlements in the hope that they will be afraid of Monsanto’s repeated idle bankruptcy threats.” Onder said he was preparing to go to St. Louis next year.
Those familiar with the talks said Bayer attorneys had used the threat of bankrupting Monsanto to get people to accept lower payments. Other companies, including Purdue Pharma LP, have filed for Chapter 11 creditors to deal with a burgeoning wave of lawsuits over the opioid pain reliever OxyContin.
In a surprising move, Bayer is also pushing for early cases that it lost in court, people said. In total, juries from three lawsuits ordered the company to pay a total of $ 2.4 billion in damages. The judges later reduced these awards to $ 191 million.
The first Roundup verdict came from a California state jury that held Monsanto responsible for the lymphoma of a Grounds Keepers in 2018 and awarded him $ 289 million in damages. A judge later reduced that to $ 78.5 million. Oral appeals are scheduled for June 2 in San Francisco.
The refusal to include earlier judgments in the settlement could be a signal for future claims that Bayer will not just turn around and pay, said Carl Tobias, professor of mass killing law at Richmond University can, ”said Tobias. “In the meantime, people will die.”
The contracts also limit eligibility for non-Hodgkin’s lymphoma cases and those in which the plaintiffs have died from this specific cancer in the past decade. This emerges from a Bayer term sheet that Bloomberg News reviewed in January. Roundup users who blame the product for causing their multiple myeloma cancer will not get anything under the agreement.
The consolidated case is In re: Roundup Products Liability Litigation, MDL 2741, District Court, Northern District of California (San Francisco).
(Updates the approvals and adds the CEO’s background from the fifth paragraph.)
For more items like this, please visit us at bloomberg.com
Subscribe now to stay up to date with the most trusted business news source.
© 2020 Bloomberg L.P.