US Supreme Court rejects second Roundup petition

The US Supreme Court has denied a second Bayer request to review litigation alleging that its legacy company Monsanto's glyphosate-based Roundup herbicide causes cancer, handing another blow to the company's ongoing effort to ward off thousands of similar lawsuits filed by US residents.

The justices on Monday (June 27th) let stand an $87 million award to Alva and Alberta Pilliod, who alleged that nearly 30 years of spraying Roundup caused them to develop non-Hodgkin's lymphoma (NHL). The decision comes less than a week after the court passed on Bayer's appeal of a $25 million verdict in a similar case.

Pre-emption debate

The Pilliods sued Monsanto in California state court in 2017, alleging that the company should have warned them of the cancer risk from the herbicide. A state jury was convinced and awarded the couple $2 billion in punitive damages and $53 million in compensatory damages - the figure was lowered to $87 million on constitutional grounds by the state judge overseeing the case. The California Supreme Court rejected Bayer's appeal in November 2021, prompting the company to turn to the Supreme Court.

The company disputes the claims that glyphosate causes cancer and argued that the state-based failure-to-warn claims are pre-empted by federal pesticide law as the US EPA has repeatedly found the herbicide is not a carcinogen. Bayer's appeal of the Pilloid case also argued the punitive damages award - which totaled $69.3 million - was too high and violated the US Constitution's due process protections.

"Bayer respectfully disagrees with the Supreme Court's decision, but the company is not surprised given the Court's declination in Hardeman just one week ago," Bayer said in a statement. "There are likely to be future cases, including Roundup cases, that present the US Supreme Court with pre-emption questions like Pilliod and Hardeman and could also create a Circuit split and potentially change the legal environment."

Bayer noted that it has won the last four Roundup verdicts and is confident in its strategy to manage the litigation risk associated with future US claims. The company has already spent some $11 billion to settle more than 100,000 glyphosate cases and set aside some $4.5 billion to contest tens of thousands of unresolved claims. According to legal briefs filed by Bayer, 19 cases alleging that Roundup causes cancer are scheduled to go to trial this year with another 78 scheduled for 2023.

Eyeing Carson, considering cancer

The case most likely to give Bayer the Circuit split it wants is currently before the US Court of Appeals for the Eleventh Circuit.

The case was filed by Georgia resident Dr John Carson in 2017, who alleges that exposure to Roundup caused him to develop a type of cancer called malignant fibrous histiocytoma (MFH).

A Georgia federal judge in 2020 issued a mixed ruling, keeping alive claims related to allegations of defective product design and company negligence, but agreeing with Bayer that the failure to warn claims are pre-empted by the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA). In an effort to solidify the judicial view on pre-emption, Bayer struck a deal with Dr Carson to appeal the decision on FIFRA preemption. The company agreed to pay Dr Carson $100,000 to drop the surviving claims and pursue an appeal of the pre-emption ruling.

An affirmation by the Eleventh Circuit on the pre-emption claim would create a clear split with the Ninth Circuit and could persuade the Supreme Court to intervene.

A three-judge panel of the Eleventh Circuit heard oral arguments in November 2021, but has yet to issue a ruling.

EPA cancer review

In light of the Hardeman decision last week, Bayer urged the Eleventh Circuit for a decision, saying the pre-emption question "has nationwide importance."

Mr Carson, however, also pressed the court on a different front and highlighted a new controversy that could prove a major headache for Bayer. He sent the panel a letter last week referencing a recent ruling from the Ninth Circuit on EPA's 2020 interim registration decision for glyphosate.

The Ninth Circuit found that the EPA failed to follow its own science guidelines and lacked substantial evidence needed to support its assertion that glyphosate is "not likely" to cause cancer. The court vacated EPA's human health assessment and ordered the agency to redo its analysis. The ruling has no immediate impact on glyphosate uses but could ultimately force the Agency to impose additional restrictions on the nation's most widely-used herbicide. Dr Carson suggests the court's decision undermines Bayer's pre-emption argument.

The company's pre-emption argument "leans heavily" on the EPA's now-vacated conclusion, Dr Carson says, arguing that his design-defect and off-label failure-to-warn claims "did not require Monsanto to 'label or package [its] products in any particular way".

"These claims fall well outside the reach of FIFRA's 'narrow' preemption provision," he concludes. "Now that EPA's review decision has been vacated, it provides no support for Monsanto's position."

Posted 12 July 2022 by Jonathan Pegg, US Correspondent, IHS Markit

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.