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(Bloomberg) -- Legal settlements usually aim at ending litigation, but Bayer AG has entered into a deal that essentially pays a Georgia man to keep fighting the company in court.
a bag of chips: A bottle of Bayer AG Roundup brand weedkiller is arranged for a photograph in a garden shed in Princeton, Illinois, U.S., on Thursday, March 28, 2019. Bayer vowed to keep defending its weedkiller Roundup after losing a second trial over claims it causes cancer, indicating that the embattled company isn't yet ready to consider spending billions of dollars to settle thousands of similar lawsuits.© Bloomberg A bottle of Bayer AG Roundup brand weedkiller is arranged for a photograph in a garden shed in Princeton, Illinois, U.S., on Thursday, March 28, 2019. Bayer vowed to keep defending its weedkiller Roundup after losing a second trial over claims it causes cancer, indicating that the embattled company isn't yet ready to consider spending billions of dollars to settle thousands of similar lawsuits.
Bayer’s goal is to force a case to the U.S. Supreme Court and get a ruling that would undercut a key claim in thousands of lawsuits alleging its Roundup weed killer causes cancer, according to its public statements. The gambit could, if successful, save the German drug maker potentially hundreds of millions of dollars.
Bayer has agreed to pay as much as $11.6 billion to resolve existing Roundup lawsuits from about 125,000 consumers and farmers in the U.S. and yet-to-be filed claims. The litigation has been a lingering obstacle for Bayer from its 2018 purchase of Monsanto Co. More lawsuits are filed almost daily.
The company wants to halt new suits, and one way to do that is to get a favorable Supreme Court ruling on what Bayer said in March are “significant federal questions” in the litigation. A case brought by a Georgia doctor that Bayer recently settled may accomplish that.
After John Carson sued the company in 2017, Bayer asked U.S. District Judge R. Stan Baker in Savannah to throw it out. The case survived, with Carson allowed to move forward with narrowed arguments that Roundup’s design is defective and Bayer was negligent.
Read More: Bayer’s Costs to Fight Future Roundup Lawsuits Climb
There was a silver lining for Bayer. In his December decision, Baker said Bayer had no duty to warn Roundup users about its cancer risk because the U.S. Environmental Protection Agency had previously approved the product’s label. Other judges around the country have rejected what’s known as a preemption claim.
For the decision to carry weight beyond Carson’s case, Bayer needs a federal appeals court to agree. So, according to court papers, Bayer has entered into a settlement with Carson’s lawyer, Ashleigh Madison, in which Bayer will pay Carson as long as he appeals the preemption issue the company won to the U.S. appeals court in Atlanta. (The deal also requires Carson to surrender claims he won.)
Winning in that appeals court is Step One for Bayer. Next, the company hopes the Supreme Court will weigh in on the issue -- a more likley prospect if different appeals courts reach contradictory conclusions about the preemption issue. University of Georgia law professor Elizabeth Burch said Bayer probably figures the appeals court in San Francisco will rule against the company in a case that led to a $25 million award against it.
What Bloomberg Intelligence Says
“Bayer may fail to win reversal of a $25 million award over claims Roundup causes cancer. That court may not find claims preempted by federal law, but we think the Supreme Court will.”
-- Holly Froum, Litigation Analyst
For the full report, click here
Of course, Bayer could lose in the Atlanta-based appeals court or the Supreme Court. But Bayer has expressed confidence in its argument, saying in a legal brief that laws and regulations “make clear” that the EPA’s approval of a Roundup label without a warning should decide the case.
And a favorable Supreme Court ruling on preemption could halt the steady stream of Roundup lawsuits, said Adam Zimmerman, a Loyola Law School professor.
Bayer defends its deal, saying in a statement that the settlement pays Carson an undisclosed sum. (Carson gets more money if he wins on appeal, according to court records.)
“The parties have reached an agreement to resolve the Carson case on confidential terms contingent on the outcome of future appellate review of the district court’s dismissal of his failure-to-warn claims on federal preemption grounds,” Bayer said.
Read More: Bayer Won’t Ask U.S. Supreme Court to Reverse Roundup Loss
Madison didn’t respond to calls and emails, and Carson didn’t return calls to his office. In an email that other lawyers suing Bayer shared with Bloomberg News, Madison said the settlement is the “best possible outcome” for Carson and that, under the deal’s terms, the appeal is in his “best interest.”
Brent Wisner, a San Francisco lawyer who is helping lead nationwide Roundup litigation against Bayer, assailed the strategy, saying Bayer has already won the preemption fight in Carson’s case. The appeal is a “sham,” he said in an interview.
Bayer is “trying to buy an appellate decision,” he said.
Burch called the deal “troubling” and questioned whether Bayer is manipulating the legal process. “The fact that Bayer is forcing this up on appeal in a way that clearly advantages them, it just doesn’t pass the smell test,” she said.
That’s not so, said Bayer. In a court filing, the company told the Atlanta-based court that its deal with Carson is supported by a decision from another appeals court in a case with a similar settlement structure.
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