Bayer Questioned by Judge on Future Claims Settlement Plan

Bayer AG faced probing questions from a judge over its plan to pay as much as $2 billion to resolve future lawsuits over claims that its Roundup weed killer causes cancer.

Bayer and lawyers representing consumers presented the deal Wednesday to U.S. District Judge Vince Chhabria in San Francisco, who last year rejected a $1.25 billion proposal.

The settlement is part of a broader $11.6 billion agreement to resolve Roundup lawsuits from about 125,000 consumers and farmers in the U.S. Another piece of the broader accord -- $650 million for hundreds of U.S. cities, counties and ports suing over toxic PCB contamination -- faced pushback from a federal judge in Los Angeles. There, too, Bayer and lawyers representing plaintiffs have been sent back to the drawing board multiple times.

The litigation over both Roundup and PCBs remains a lingering obstacle for Bayer from its purchase of Monsanto Co., as the settlement process drags on and more lawsuits over the weed killer pile up almost daily. Bayer shares showed little change Thursday in Frankfurt trading.

Before the hearing, Chhabria listed in a written order what he called “big-picture concerns” about the settlement. If those are “meaningfully addressed,” the judge wrote, he’ll turn to “the many smaller questions” the deal presents at another hearing.

Bloomberg Intelligence: Bayer $2 Billion Roundup Proposal’s Odds of Approval Look Dicey

Chhabria expressed concern about what happens to consumers who are exposed to Roundup but are not yet diagnosed with non-Hodgkins lymphoma – and may not be for a decade or longer. The judge expressed skepticism of a proposed medical monitoring program and compensation fund ending four years after the settlement.

“There’s no reason for me to believe there’s going to be any compensation for me as a result of this settlement,” Chhabria said, referring to the not-yet diagnosed consumers.

Bayer said after the hearing it appreciates the court’s direction.

“It is common for courts to request some adjustments to class settlement agreements like this and we are confident that, working with class counsel, we will be able to address the matters raised by the court,” the German company said in an email.

The judge spent a large portion of the hearing trying to size up the threat of a U.S. Supreme Court ruling that could potentially wipe out outstanding Roundup lawsuits.

Read More: Bayer Deal Pays Roundup Plaintiff to Keep Fighting in Court (1).

“By far the greatest litigation risk is that the Supreme Court would rule at some point that these state law claims are preempted, and that they would have no claim whatsover.”

Numerous consumers have objected to the settlement on a variety of grounds, saying that revisions to the earlier, rejected proposal aren’t good enough.

One point of contention is whether consumers are being misled about the compensation they’re entitled to receive.

Objectors say that while the deal touts a payoff of as much as $200,000 per person, the plan sets up “extensive roadblocks” to bar anyone from getting more than $65,000.

Under the terms of the settlement, all litigation is put on hold for four years while a science panel reviews the evidence linking Roundup to cancer.

Wednesday’s Los Angeles hearing over PCBs marked the third time U.S. District Judge Fernando Olguin has declined to approve a proposed class settlement. He said he’s still concerned about a claims filing deadline within the plan and $98 million slated for attorneys’ fees and costs.

“We’re getting much closer, but I still have some concerns,” Olguin told lawyers in a teleconference. “We’re getting there.”

The suit was filed by a group of more than 2,500 local government entities, including the cities of Los Angeles, Seattle and Oakland, California. They sued in 2016, the same year Bayer bought Monsanto and found itself defending itself against a blizzard of lawsuits over the chemical company’s production of PCB -- or polychlorinated biphenyl -- which was banned in in the U.S. in 1978.

The settlement calls for the creation of four funds from which cities and counties can draw to deal with PCB contamination. The amount set aside for remediation efforts totals $550 million. Municipalities have 60 days to opt out of the deal once it’s approved, according to court filings. Bayer can pull out of the accord if more than 2% of governmental entities rebuff the offer.

The Roundup case is In Re Roundup Products Liability Litigation, 16-md-02741, U.S. District Court for the Northern District of California (San Francisco). The PCBs case is City of Long Beach v. Monsanto Co., 16-CV-03493, U.S. District Court, Central District of California (Los Angeles).

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