NOTE: This article includes information we hadn’t seen elsewhere about the settlement of the earlier Starlink GM contamination fiasco, that not just growers but also consumers received compensation.

It seems, “People who ate the tainted food, some of whom said they became nauseated, received $9 million worth of coupons for corn products, according to their lawyer, Krislov.”

The rest of the $119 million settlement went to growers. In this case, rice farmers are looking for considerably more by way of compensation for their losses. 

EXTRACTS: Don Downing, a St. Louis-based lawyer for the growers, said in a court filing last year that damages might exceed $1 billion. The figure will be lower because class-action status was denied, he said this month, declining to estimate the total.

The $1 billion would be equivalent to 16 percent of Bayer’s 2007 net income…

——

Bayer Avoided Class Actions, Faces 1,200 Rice Suits
By Andrew Harris and Margaret Cronin Fisk
Bloomberg, October 15 2008

http://www.bloomberg.com/apps/news?pid=20601087&sid=auu3BOBRYwaE&refer=home

Bayer AG’s defeat of a bid by U.S. rice farmers to sue the company as a group doesn’t end the matter. The German producer of genetically altered seeds still faces 1,200 individual claims of crop contamination.

Farmers in five states sued after trace amounts of types of modified rice being grown experimentally by Bayer in Louisiana were found in rice raised for consumption. U.S. District Judge Catherine Perry in St. Louis in August refused to allow the claims to be combined in class-action suits, one per state. She may set a date tomorrow for the first individual trial.

While the farmers lost group leverage for forcing settlements because of the ruling, they may regain it should Bayer lose early trials, said Carl Tobias,a University of Richmond law professor. If the facts are “very similar,”early verdicts “might be applied to other cases” by the court, leaving only the amount of damages for juries to decide, he said.

“That ups the ante for the first few trials,” said Tobias, who teaches tort and product-liability law and is an expert on federal courts and civil procedure. “It might push the pressure to settle.”

Don Downing, a St. Louis-based lawyer for the growers, said in a court filing last year that damages might exceed $1 billion. The figure will be lower because class-action status was denied, he said this month, declining to estimate the total.

“We wouldn’t feel comfortable until our experts are finished with their analysis,” Downing, of the law firm Gray, Ritter & Graham, said in an interview. 

2007 Profit 

The $1 billion would be equivalent to 16 percent of Bayer’s 2007 net income of 4.7 billion euros ($6.4 billion) and 13 percent of CropScience’s sales of 5.8 billion euros.  Bayer lawyer Mark Ferguson in Chicago said it’s impossible to know whether jury findings in one trial would be applied in another. The outcome “would depend on the specific case or issue involved and the precise facts and circumstances,” he said.

Bayer shares have fallen 28 percent from a year ago. The German Stock Index fell 39 percent in the same period as the global credit crisis pushed down shares. The company shares today fell 3.44 euros, or 7.6 percent, to 41.86 euros in Frankfurt, and the index fell 6.5 percent.

Bayer’s LibertyLink brand of genetically altered rice was being studied at Louisiana State University in an effort to create a crop that could be safely sprayed with a weed-killer, the U.S. Agriculture Department said. Two strains of LibertyLink were found amid commercially grown long-grain rice in Louisiana, Mississippi, Texas, Arkansas and Missouri, the agency said.

Export Bans 

The farmers blame Bayer, based in Leverkusen, Germany, and its CropScience unit for damages caused by temporary bans on two kinds of high-yield seeds, export restrictions and a plunge in prices that followed discovery of the contamination.  Because LibertyLink rice wasn’t approved for human consumption, the European Union, Japan and Russia restricted its sale, according to the complaint. Within four days of the 2006 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. News of the contamination caused futures prices to fall approximately 14 percent, and American rice exports also fell, the growers said. 

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.

Tiny Amounts 

Only “minute” amounts of LibertyLink were found in U.S. crops, Bayer attorney Ferguson said. “It’s our view most of these plaintiffs didn’t suffer market losses in selling their rice,” said Ferguson, of Bartlit Beck Herman Palenchar & Scott in Chicago.  “There was a short time when rice futures prices dropped, but that doesn’t necessarily translate to losses to farmers.” Prices later rose to “record heights,” he said.

Bayer, where the aspirin was invented in 1897 according to the company, is the world’s seventh-largest seed maker as well as Germany’s largest drugmaker. The 17,800-employee CropScience unit’s sales of 5.83 billion euros were about 19 percent of Bayer’s total of 32.39 billion euros, according to the company.

Analysts Andrew Benson of Citigroup Inc. in London, Richard Logan of Goldman Sachs Group Inc. and Karl-Heinz Scheunemann of Landesbank Baden-Württembergin Stuttgart, who follow Bayer, said they haven’t studied the cases and declined to comment. Jeffrey LaFrance, a University of California agricultural economist in Berkeley, said rice prices rebounded rapidly after the taint was disclosed. Still, at least some of the 1,200 farmers suffered during the import-ban period, he said. 

Corn Lawsuits 

LaFrance played a role in U.S. litigation that ended six years ago as an expert for Aventis CropScience, a French company later bought by Bayer. Aventis was sued over crop contamination by genetically modified corn. Separate cases by growers and consumers were settled out of court for $119 million. 

People who ate the tainted food, some of whom said they became nauseated, received $9 million worth of coupons for corn products, according to their lawyer, Krislov. The rest went to growers and their attorneys.

In deciding against rice class actions, the St. Louis judge ruled there were too many ways for the farmers to sell their crops, and to have lost money, to treat them as cohesive groups.

Defendants generally oppose class certification, Krislov said.

“The hope is that the plaintiffs give up, which is a strategy that certainly works plenty,” he said. “But when you have a significant numberof people with sizable claims, maybe that backfires.”

The case is In Re Genetically Modified Rice Litigation, 06- md-1811, U.S.District Court, Eastern District of Missouri (St. Louis).

To contact the reporters on this story: Andrew Harris at the federal court in Chicago at aharris16@bloomberg.net; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.