In late summer of 2006, the USDA announced that a trace amount of genetically modified rice had been found in the U.S. rice supply. Southern rice farmers watched helplessly as exports and price took a hit.
Before long, thousands of growers had filed suit against Bayer, the company whose GM trait had been identified.
Four of those cases have now been heard and plaintiffs have won each. The latest case — involving a dozen farmers from central Arkansas — was heard in Lonoke, Ark., and resulted in a jury award of nearly $50 million in compensatory and punitive damages.
Shortly after the Lonoke decision, Delta Farm Press spoke with Bruce Mackintosh, General Counsel for Bayer CropScience LP, about the litigation, the company’s actions during 2006, the willingness to settle and why the company will “vigorously” appeal.
(For an interview with plaintiff attorneys, see http://deltafarmpress.com/rice/gm-rice-litigation-plaintiffs-0504, please)
Among Mackintosh’s comments:
After this latest case, your general thoughts about settlements?
“The company is willing — and has been willing — to talk with farmers, whether plaintiffs, or not, about reasonable compensation for damages incurred. We have not had the reaction from plaintiff lawyers that would lead to a wide-scale action in that area.
“However, we were recently successful in working with Riviana (a rice mill and exporter) with respect to its claims. We did make a settlement with them. I think they’re satisfied and moving on. We were pleased to have been able to do that.
“We’d like to do (the same) with other industry claimants — there are different types of claimants with farmers being the most numerous. We’d be happy to do that if they can talk in reasonable terms that bear some relation to what actually happened in the industry in 2006 and subsequent years.
“The court system does have a mechanism to encourage that. The MDL (Multi-District Litigation), the federal court in St. Louis, has appointed a retired federal judge as a mediator. We’re called to meet with the mediator from time to time. We’ve done so recently … and at that meeting nothing tangible (resulted) that day. I’m hopeful our willingness to talk settlement — and, in fact, settle claims at reasonable levels — is being considered among plaintiffs’ lawyers.”
Four cases have been heard so far. I understand the first three (had) compensatory awards but not any major punitive damages. What was the difference between those first three (trials) and the latest trial in Lonoke (where $42 million in punitive damages was awarded)?
“I attended all four trials and will toss out a guess. Everyone else may have one, as well.
“The federal court environment produces a jury that’s not close to the farmer. It produces a jury from a region of Missouri — which includes farm country, city and suburban areas. It’s quite a mixed jury.
“The first two MDL cases (in St. Louis) included almost no one with much, if any, direct farm concern.
“In Woodruff County, Ark., the industry that principally supports the area is farming. There’s a much closer connection of the jurors. We can say the same thing about Lonoke. The verdicts in those cases — even the time of deliberations — indicate to us (the jury was composed of) folks with a lifelong understanding of the farming industry and an understandable orientation towards the farmers.
“Go to a city venue and you’ll find much less of that.”
Several observers on the plaintiff side have said the trial in Lonoke kind of tilted when Keith Glover (who heads Producers Rice Mill, in Stuttgart, Ark.) took the stand. Do you agree with that?
“That was about the time when they opened their case and I’d expect them to say that. I didn’t notice anything in particular. Keith Glover is well placed in the rice industry, is well-known and has his own lawsuit for damages.”
What about appeals from here? You’ve said you’ll appeal vigorously. Where, and how far, are you willing to take appeals?
“Appeals for the federal court cases in St. Louis are to the 8th U.S. Circuit Court of Appeals. … We will appeal the first two verdicts. The process of paperwork is taking quite a long time, so I can’t tell you when we have an appeal filed.
“The two Arkansas cases are a bit distinguished now. The Woodruff County case will be appealed — with some issues unique to it — to the Court of Appeals in Arkansas. Beyond that is the Arkansas Supreme Court.
“The Lonoke case will be appealed directly to the Arkansas Supreme Court. We’re invited, permitted — and even required to do that — because of the constitutional question inserted into the case: the judge holding that the limit on punitive damages in Arkansas is unconstitutional. That forces it to the Arkansas Supreme Court.
On grounds for appeal…
“We have similar concerns in all cases. The federal judge (Catherine Perry) made some very substantial and, we believe, quite erroneous rulings on major points of law in the first trial. She duplicated her own rulings in the second trial. The Arkansas state judges followed what she did in the third and fourth trials.
“So, one set of erroneous rulings have been essentially copied three additional times.
“And there are some substantial points. One that’s fairly simple to understand is the federal statute regulating work with genetically modified plants. (That statute) was written by Congress and contains explicit federal preemption language, saying, ‘having made the regulations in this area, no state may get involved in regulating in this area. We, the feds, will regulate. (The state) can’t.’ …
“As a second point, I think I saw the press quoting one of the Lonoke plaintiff lawyers recently saying, ‘Gee, what’s hard about this? It’s a really simple case. Bayer owned (the GM trait), it got out, pay us money.’
“That’s attractive — so attractive they’ve repeated it every five minutes for four months of trial. But it simply isn’t true and not applicable. That would be correct under a standard known as ‘absolute liability.’ And it might apply if you were hauling a wagonload of dynamite through the middle of town while smoking and flipping matches onto the load.
“But in these cases, the standard that applies is a ‘negligence standard.’ The question for the jury is a little more complicated. It’s: how did this happen? The fact is, no one knows. Did Bayer cause it to happen? Well, if you don’t know how it happened, it’s hard to say who caused it. Even assuming we did, the question then is: in doing what it did was Bayer not as careful as a reasonable and ordinary person in the same circumstance should have been? That’s the standard.
“If you’re using state-of-the-art techniques at the time, if you’re as good and careful at what you’re doing as anyone else who does it — that’s the test for negligence. If we were very sloppy and not giving any consideration to how it’s done right, it would support a negligence finding.
“The evidence all shows we were kind of defining ‘state of the art.’ We were meeting the steps all other companies had met up until that time in doing field trials of GMOs. We added some (additional measures) others had never done…
“The plaintiffs are tossing out an attractive phrase that implies this is absolute liability. ‘We know it got out, Bayer owned it, they owe us money.’ That isn’t the standard that applies and that’s an example of an appellate point to be used. It was tried under a standard that demanded 100 percent perfection. That’s simply not the law.
“If we were to have a trial on an actual, literal negligence standard, I expect the results would be quite different.”
What about the plan Bayer had when developing LibertyLink rice? At the time — and it’s still the case as I understand it — no GM rice was allowed in any world market. Was Bayer’s plan to get LibertyLink done first? Working, at the same time, lobbying the EU and other market forces to allow (GM rice) in?
“We’ve addressed this in trial.
“The story is, we were approaching rice as we’ve approached all the other genetically modified crops that we’ve developed and commercialized. The regulatory system (is set up so that) you must have field tested the crop first to apply for permission for the crop to be grown or sold…
“It’s a very standard approach: start developing it and if it looks hopeful and, as you narrow down choices, it looks like you’re developing a winner you’ll run trials and gather data. As soon as you have enough data, you put together regulatory packages and file them in various countries.
“The question becomes how many nations of the world must you have (permission from) before you commercialize the product? We sure want the United States. Canada and Mexico are big buyers, so you want (them). Europe is a big buyer of most of our crops, so EU, or separate countries, would be needed. And we’ve filed LibertyLink rice (in EU nations) and responded to data requests for many years….
“Our practice, as with other GM-crop developing companies, is to get positive registrations/approvals in the countries that matter most … to the farmers who will buy and use the product.
On “approval” versus “commercialization”…
“Approval is a matter of paperwork, only, following intensive testing and review. Prior to approval, the seeds stay in a closed, protected area.
“Commercialization is when we have enough paperwork and permission and we’re saying ‘yes,’ the farmers are saying ‘yes’ and there’s no reason to stop and we launch the product. Like with LibertyLink soybeans. Then, it ships and we start growing for seed in a much larger scale.”
Your reaction when Riceland was dropped as a defendant from the Lonoke case?
“In (Lonoke) court filings, we alleged Riceland was added as a party so we’d be blocked from taking this case to federal court. In the Woodruff County trial, Riceland was included for exactly the same reason. The benefit to the plaintiffs, of course, is they’ll get a local jury (whose members) have lived their whole lives with, and next to, rice farmers as neighbors.
“We’d prefer to gather all these cases in one place. All the parties … have benefited enormously from the federal MDL process where everything goes into one big federal court. You do 75 percent of the work there and then (the cases) can be sent back to local courts for trial. We prefer that.
“To be frank, I wasn’t shocked (when Riceland was dropped). … They put (Riceland) in to keep the cases in state court where they have much less efficiency but have, what they expect to be, a friendlier jury. It’s a legal strategy.”
Farmers wonder about the timing of USDA’s announcement in August. (Tainted rice) was first discovered earlier that year, in January. Farmers wonder why they weren’t told prior to planting season that this could be a possibility.
“Of course they wonder about that.
“If one were to read the transcript of the trial, the answers are in there. I know it isn’t simple, but they’re in there.
“The evidence is that early in 2006, Riceland was contacted by a customer we now know was in France. That customer was a big rice buyer and Riceland was at least one of its suppliers. As a responsible rice-handler would do, the (French company) was checking and testing for any GMO presence. They got a positive hit for the first time.
“They called up Riceland and said, ‘Hey, what’s going on?’ Riceland’s reaction was to consult with an expert who (believed) it highly likely that the (contaminating material) was from dust in a truck, silo, bin, or some container left from a GMO corn, beans or canola shipment. After (several months), which Riceland says wasn’t an unreasonable delay, they had samples from Europe tested in a very reputable lab. GMO presence was confirmed — and this was about midway between when they first learned (of the problem) and when they came to us.
“There was still more speculation about (the problem originating from another GMO crop). So, six months went by and they contacted us. Evidence shows we asked for sample material immediately. It took some time for us to get sufficient material to test. We confirmed that it was a GMO — likely one of (Bayer’s). We hoped it would be an approved GMO event but it wasn’t. We then tested and confirmed it was LibertyLink 601, which is now deregulated.
“That day, we told Riceland the results. We called the USDA and informed them and followed up with a formal letter. … That was followed up by countless telephone conferences with the government.
“We cooperated with every request — including the government’s request, ‘Don’t you dare say anything. We have to get ready. People expect the USDA to have answers.’ So, we worked with them. After our (mid-summer) report to them, their instruction was, ‘No one talk. We’ll make the announcement.’ And they did on Aug. 18.
“The period of our knowledge was entirely consumed by getting sufficient material to test, testing, moving directly to conclusion and, within 24 hours, reporting the information to the USDA. They then took four to six weeks before making a public announcement.”
“I’ve been reading about Newpath-resistant barnyardgrass in Arkansas. I’m not sure what the solution will be. But Bayer is now, and has been for decades, an investor and innovator in support of agricultural solutions.
“We’re not giving up on that. We continue to do that in many crops in all corners of the world.
“At this time, we certainly do have some difficulty in U.S. rice. But we want to stay in the business of investing in solutions for U.S. farmers’ challenges. The sooner we deliver a solution to problems, the better off farmers will be and the better off we, as a company, will be.
“We really regret this has come between Bayer and farmers, who are the purpose of all our work and investment. When I see farmers and hear them speak, I can tell they were scared to death and it hit them hard. We’re very sorry it happened.
“I think the actual economic consequences — except when described by their lawyers — weren’t so devastating. The market was really good to these guys promptly after that.”
For more on GM rice, see http://deltafarmpress.com/searchresults/?ord=d&terms=GM+rice.
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