SAN FRANCISCO (Legal Newsline) – Unhappy investors have failed to make their case, Bayer says as it defends one of the fronts of litigation opened by the Roundup weedkiller.
On March 22, Bayer filed its motion to dismiss the securities lawsuits filed by class action lawyers who claim the company misled shareholders about how much personal injury litigation over Roundup would cost.
The company is in the process of settling non-Hodgkin’s lymphoma claims for billions of dollars, and plaintiffs lawyers are battling over hundreds of millions of dollars in fees.
At issue in the securities litigation is whether Bayer failed to accurately report how much it would be spending on the personal injury lawsuits. Bayer calls the shareholder cases an example of attempting to plead fraud by hindsight, noting it bought Roundup-maker Monsanto in 2018 – before California juries started hammering it with multimillion-dollar verdicts by connecting its active ingredient glyphosate to NHL.
“The (Private Securities Litigation Reform Act) requires securities-fraud complaints to detail contemporaneous statements or conditions showing why alleged misrepresentations were false when they were made. Plaintiffs have not done this,” the motion says.
“The crux of their theory of falsity – their allegations that defendants’ disclosures about due diligence and glyphosate were false when made – reduces to the fact that juries later found Monsanto liable to personal injury plaintiffs.
“That does not suffice under the PSLRA, and it is not the only defect in plaintiffs’ pleading of futility.”
Plaintiffs lawyers are trying to turn alleged mismanagement into a claim for securities fraud when they allege Bayer misled shareholders about the quality of its due diligence on Monsanto, the motion says.
Bayer agreed to buy Monsanto in 2016 for $63 billion, saying the combination would create the world’s leading life sciences company. Instead the takeover turned tricky, as lawyers spent more than $100 million recruiting plaintiffs who accuse Roundup of causing non-Hodgkin’s lymphoma, a common cancer that doctors say has no known cause three-quarters of the time.
Bayer Chairman Werner Baumann repeatedly told investors the Roundup litigation risk was low because the product was safe. It turns out he underestimated the lottery-like characteristics of the American legal system, in which plaintiff lawyers can win huge verdicts despite the weight of scientific evidence going against them.
In the telling of lawyers at Bernstein Litowitz, “the truth began to emerge on August 10, 2018, when a jury in the Johnson case found unanimously that Monsanto’s glyphosate-based Roundup weed killer was a `substantial factor’ in causing the plaintiff to develop non-Hodgkin’s lymphoma.
The proposed class action would cover investors who purchased Bayer shares between May 23, 2016, when Bayer first announced its takeover offer for Monsanto, and March 19, 2019, when a jury in the first federal bellwether trial delivered a verdict against Bayer. The company’s stock plunged 9% on the news. The shares have yet to recover.
After the first jury verdict in 2018, Baumann told investors a “verdict by one jury in one case does not change the scientific facts and the conclusions of regulators that glyphosate does not cause cancer.” The company still says glyphosate is safe and it continues to sell Roundup, one of the most widely used chemicals on earth.
A federal judge has ruled that California cannot order a cancer warning on Roundup because it would be false and mislead consumers, and the Environmental Protection Agency has also stated the product does not cause cancer.