Shares of Bayer AG surged approximately 11 percent in German trading following a favorable ruling in the United States regarding the cancer-related lawsuit against its Roundup weed killer.
In a statement, Bayer announced that the Third Circuit Court of Appeals ruled favorably in the case of Schaffner v. Monsanto, unanimously determining that state-based failure-to-warn claims are preempted by the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).
Plaintiff David Schaffner, diagnosed with non-Hodgkin's lymphoma, alleged in his lawsuit that Monsanto, Bayer's subsidiary, violated state law by not including a cancer warning on the Roundup label.
Bayer, which acquired Monsanto in 2018, noted that this decision diverges from prior rulings by the Ninth and Eleventh Circuits on similar legal issues in the Roundup litigation.
The company is evaluating the impact of this ruling on other pending cases and anticipates presenting its arguments, supported by the Third Circuit's decision, to the U.S. Supreme Court. Roundup, which contains glyphosate, has faced numerous lawsuits claiming the ingredient causes cancer.
Previously, the International Agency for Research on Cancer, under the World Health Organization, categorized glyphosate as "probably carcinogenic to humans." Conversely, the U.S. Environmental Protection Agency (EPA) found no significant risks to human health when glyphosate is used as directed and deemed it unlikely to be a human carcinogen.
The European Commission and Health Canada's Pest Management Regulatory Agency also approved glyphosate's use, stating no evidence links it to cancer.
Bayer acquired Roundup and its associated legal challenges in 2018 with the purchase of Monsanto. To manage these lawsuits, Bayer set aside $4.5 billion in 2021 for settlements, having previously allocated nearly $10 billion for earlier litigation.
That same year, Bayer agreed to a $2 billion settlement with plaintiffs’ attorneys for future lawsuits. However, in 2022, the U.S. Supreme Court refused Bayer’s appeal to dismiss multiple Roundup-related lawsuits.
In a recent setback, a Philadelphia jury ordered Bayer to pay $2.25 billion in January 2023 to a Pennsylvania man who claimed to have developed cancer after using Roundup. Bayer argued that the jury’s decision contradicted extensive scientific evidence and regulatory assessments affirming Roundup's safety.
In response to the Third Circuit's latest decision, Bayer stated, "The Company is pleased with the unanimous decision from the Third Circuit holding that plaintiff's state-based warning claims are expressly preempted by FIFRA. The Court concluded that 'the alleged state-law duty to include the Cancer Warning on Roundup's label imposes requirements that are different from those imposed under FIFRA, and that it is therefore preempted by FIFRA.'"
According to Bayer, this federal preemption ruling is a pivotal issue in the litigation and creates a split among federal appellate courts, requiring review by the U.S. Supreme Court to resolve this significant legal question.
Bayer reiterated its confidence in the safety of Roundup products, highlighting the scientific consensus and regulatory support for the non-carcinogenicity of glyphosate-based herbicides.
On Germany's XETRA exchange, Bayer shares were trading at 29.09 euros, up 10.7 percent.
