Bayer Loses Fifth Straight Trial Over U.S Rice Crops
Bloomberg, July 14 2010
Bayer AG lost its fifth straight trial over contaminated U.S. long-grain rice to a Louisiana farmer who claimed the company's carelessness with its genetically engineered seed caused exports to plunge.
A jury in St. Louis said today the company should pay damages of $500,248. The company previously lost two trials in state court and two in federal, for a total of more than $52 million in jury awards.
It faces about 500 additional lawsuits in federal and state courts with claims by 6,600 plaintiffs. It hasn't won any rice trials so far. The Louisiana grower, Danny Deshotels, and his family claimed the company and its Bayer CropScience unit were negligent in testing their genetically modified LibertyLink seed, causing a dive in exports to Europe.
"Five different juries under the laws of four different states in both federal and state courts now have unanimously found that Bayer was negligent and liable to rice farmers for damages," Don Downing, Deshotels' lawyer said after the trial. "Not a single juror in any of the five trials found for Bayer."
Bayer, based in Leverkusen, Germany, denied it was negligent and disputed the damages claims. It said after today's verdict it "will consider its legal options."
"The facts in this specific case do not support an award of damages," Greg Coffey, a CropScience spokesman, said in the statement. "The company maintains that it acted responsibly and appropriately at all times in the handling of its biotech rice."
Sixth Trial Coming
A sixth case is scheduled to begin trial July 19 in state court in Arkansas, followed by a federal trial in St. Louis in October, Coffey said yesterday in an interview.
Lawyer for growers will continue pushing these cases to trial "until Bayer decides it is willing to provide fair compensation through settlement," Downing said after the verdict.
Bayer has been participating in mediation discussions in the federal lawsuits in St. Louis, Coffey said. The company is "hopeful that all parties might approach resolution in a positive and reasonable manner," he said.
The newest loss might spur Bayer into "thinking seriously about a settlement," said law professor Carl Tobias, of the University of Richmond in Virginia. "Five in a row seems pretty convincing,” he said in a phone interview. "But Bayer might think it's worth it to test out a few more."
Farmers in five states claim the company and Bayer CropScience negligently contaminated the U.S. long-grain rice crop with its genetically modified LibertyLink seed, leading to export restrictions, bans on two kinds of high-yield seeds and a plunge in prices.
The rice growers' "reputation for producing a pure product was destroyed, with the export market lost," Downing told the federal court jury yesterday. "It was Bayer's carelessness, and Danny Deshotels was hurt."
Bayer didn't dispute contamination. It denied it was negligent and said rice sales rebounded after an initial drop.
The farmers' losses "were minimal and short-lived," Mark Ferguson, the company’s trial attorney, said in closing arguments at the trial. "Global prices recovered quickly with the discovery of other markets."
Deshotels lives in Lettsworth, Louisiana, about 100 miles north of New Orleans and two miles west of the Mississippi River, Downing said.
The grower asked for about $1.5 million in damages for lost sales and contamination of his land, seed and equipment.
The jury of seven women began deliberating yesterday.
The LibertyLink brand was being studied at Louisiana State University in an effort to create a crop that could be safely sprayed with a weed-killer.
In August 2006, the U.S. Agriculture Department announced that the modified seed had been found in commercially grown long-grain rice in Louisiana, Mississippi, Texas, Arkansas and Missouri.
Five days later, the European Union announced a ban on U.S. imports to the 27 countries in that group, Downing said at the start of the trial. Within four days of the announcement, a decline in rice futures had cost U.S. growers about $150 million, according to the farmers’ complaint in federal court in St. Louis.
Rice Held Safe
Restrictions were eased after Bayer’s rice was declared safe by the Agriculture Department in November 2006.
There are no claims in the rice litigation that LibertyLink harmed or risked human health. Farmers say the contamination cost them the European market for long-grain rice and that sales haven’t rebounded.
“Our rice exports to the EU fell off a cliff, almost literally, and you will see that they still haven’t recovered,” Downing said in opening statements at the trial June 21. Europeans “are still eating rice, but the customers we were selling to are now buying from these countries: Thailand, Pakistan, India and Uruguay.”
Farmers in five states asked to be allowed to pursue their claims in class action, or group suits, one action per state. U.S. District Judge Catherine Perry in St. Louis in August 2008 refused, instead scheduling test trials on typical claims. The outcomes may provide the basis for settlement negotiations.
Bayer’s previous federal court losses were for about $2 million in December and about $1.5 million in February. Those juries didn’t award punitive damages.
The two state court losses both came in Arkansas. The first verdict was for about $1 million, including $500,000 in punitive damages. The second was for almost $48 million, with $42 million in punitive damages, according to data compiled by Bloomberg.
Bayer filed post-trial motions to set aside the verdicts in federal court and “is seeking appellate review in the two state trials,” said Coffey, the company spokesman.
The case is In Re Genetically Modified Rice Litigation, 06- md-1811, U.S. District Court, Eastern District of Missouri (St. Louis).
--With assistance from Andrew Harris in Chicago. Editors: Michael Hytha, Charles Carter