Bayer Reaches Deals on Large Portion of 125,000 Roundup Suits

Bayer Reaches Deals on Big Share of 125,000 Roundup Weedkiller Suits

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Bayer AG has reached verbal agreements to resolve a substantial portion of an estimated 125,000 U.S. cancer lawsuits over use of its Roundup weedkiller, according to people familiar with the negotiations.

The deals, which have yet to be signed and cover an estimated 50,000 to 85,000 suits, are part of a $10 billion Bayer plan to end a costly legal battle the company inherited when it acquired Monsanto in 2018, the people said. While some lawyers are still holding out, payouts for settled cases will range from a few million dollars to a few thousand each, said the people, who asked not to be identified because they aren’t authorized to speak publicly.

Bayer is likely to announce the settlements, which need approval from the supervisory board, in June, people familiar with the negotiations said. None of the deals are signed, though plaintiffs’ lawyers are expected to do so the day of the announcement, the people said.

The shares gained as much as 8.2% as of 11:10 a.m. Monday in Frankfurt trading.

Getting past the Roundup drama is a top priority for Chief Executive Officer Werner Baumann, who orchestrated the $63 billion Monsanto takeover and has suffered the legal consequences ever since. The surge of Roundup claims, along with three big U.S. court losses, hammered the company’s stock, wiping tens of billions of dollars from the market value and prompting shareholders to issue Baumann an unprecedented rebuke last spring.

But since last summer, the CEO has kept the company out of more jury trials while engaging in high-stakes mediation talks. Last month, he won the annual confidence vote from 93% of shareholders amid signs that Bayer might soon reach a resolution.

“A settlement of all U.S. lawsuits for $10 billion should be a major share price trigger for Bayer,” Markus Mayer, an analyst at Baader Bank, said Monday by email.

Once a resolution is in place, Baumann will have to prove that his strategy of pairing pharmaceuticals, consumer health and agriculture makes sense. Some investors have doubts about the approach.

Bayer declined to comment on specifics about the talks. Chris Loder, a U.S.-based spokesman, said Friday the company has made “progress in the mediations” that arose from lawsuits. “The company will not speculate about settlement outcomes or timing,” Loder said in an emailed statement. “As we have said previously, the company will consider a resolution if it is financially reasonable and provides a process to resolve potential future litigation.”

Read More: Bayer’s Roundup Challenge Is to Avoid ‘Nuclear’ Jury Awards

While the exact number of settlements so far wasn’t immediately clear, the estimate of at least 125,000 claims is more than twice the amount of Roundup litigation cases Bayer has previously disclosed. The company has only acknowledged filed and served cases of about 52,500 as of April. Tens of thousands more are being held in abeyance by plaintiffs’ lawyers under agreements with Bayer, people familiar with the negotiations said. Ken Feinberg, the chief Roundup mediator, said in January the total was 85,000 and would likely increase.

Bayer has said it will earmark $8 billion to resolve all current cases, including those held in abeyance, according to some of the people familiar with the settlements. The deals so far involve many of the strongest claims against the company, the people said. It’s unclear how much would go to those who have now settled and what’s left for the holdouts. Another $2 billion will be set aside to cover future suits linking the weedkiller to non-Hodgkin’s lymphoma, people familiar with the talks said.

Still Being Sold

Under terms of the deals, Roundup will continue to be sold in the U.S. for use in backyards and farms without any safety warning, and plaintiffs’ attorneys will agree to stop taking new cases or advertising for new clients, the people said. Because some of the Roundup cases are consolidated before U.S. District Judge Vince Chhabria in San Francisco, he may need to approve the settlement of those before him, the people said.

To be sure, with tens of thousands of cases still unresolved, there’s no guarantee the company will remain within the $8 billion it has budgeted for filed and backlogged lawsuits. Bayer complicated matters last month by backing out of some deals and demanding lawyers take less because of losses tied to the Covid-19 pandemic. That could prompt more lawyers to take their cases out of the settlement, the people said.

Feinberg, the Washington-based lawyer tapped by Chhabria to oversee settlement negotiations, said last week he remains “cautiously optimistic a national settlement will be reached.” He acknowledged fallout from Covid-19 “has slowed momentum” on the talks.

Cancer Claims

The settlements are designed to resolve claims that Roundup, whose active ingredient is the chemical glyphosate, caused non-Hodgkin’s lymphoma in some users. The company denies that Roundup or glyphosate cause cancer, a position backed by the U.S. Environmental Protection Agency. Still, after Bayer’s court losses spurred a surge in new suits, investors such as Elliott Management Corp. urged the company to seek a comprehensive settlement.

Feinberg dispatched mediators to oversee meetings between Bayer lawyers and individual plaintiff attorneys, who negotiated solely on behalf of their clients. The company has worked out various payout schedules, though none will exceed three years, the people said.

At this point, only a handful of lawyers are holding out for larger payouts, the people said. James Onder, a St. Louis-based attorney handling more than 24,000 Roundup cases, said last week he’s rebuffed settlement offers that would leave his clients with as little as $5,000 each.

Bayer’s overtures “have been insulting,” Onder said in an interview. The company is attempting “to strong-arm the most vulnerable in our society into accepting minuscule settlements, hoping they will cower in fear to Monsanto’s repeated idle threats of bankruptcy.” Onder said he’s preparing for trials in St. Louis next year.

The people familiar with the talks have said Bayer lawyers used the threat of putting Monsanto into bankruptcy to get people to accept lower payments. Other companies -- including Purdue Pharma LP -- filed for Chapter 11 protection from creditors to deal with a burgeoning wave a lawsuits over its OxyContin opioid painkiller.

Challenge Verdicts

In a surprising move, Bayer is also pressing ahead with appeals of early cases it lost in court, the people said. All together, juries from three trials ordered the company to pay a combined $2.4 billion in damages. Judges later slashed those awards to $191 million.

The first Roundup verdict came from a state court jury in California, which held Monsanto liable for a grounds keeper’s lymphoma in 2018 and awarded him $289 million in damages. A judge later cut that to $78.5 million. Oral arguments in the appeal are scheduled for June 2 in San Francisco.

Refusing to include past verdicts in the settlement may be designed to send a signal on future claims that Bayer won’t just roll over and pay, said Carl Tobias, a University of Richmond professor who specializes in mass-tort law.

“It says they’ll fight ‘em through the appeals, which can take years to resolve,” Tobias said. “In the meantime, people will be dying.”

The deals also limit eligibility for payments to non-Hodgkin’s Lymphoma cases and those where plaintiffs died of that specific cancer over the last decade, according to a Bayer term sheet reviewed in January by Bloomberg News. Roundup users that blame the product for causing their multiple-myeloma cancers get nothing under the settlement.

The consolidated case is In re: Roundup Products Liability Litigation, MDL 2741, U.S. District Court, Northern District of California (San Francisco).

— With assistance by Joel Rosenblatt

(Updates shares, adds CEO background starting in fifth paragraph)