(Bloomberg) -- A U.S. judge overseeing Roundup-cancer lawsuits against Bayer AG provisionally appointed high-profile mediator Ken Feinberg to lead settlement talks over the herbicide litigation, which has tanked the company’s stock since it acquired Monsanto almost a year ago.
U.S. District Judge Vince Chhabria in San Francisco, who’s handling hundreds of lawsuits filed against Bayer in federal court, told lawyers for both sides Wednesday that they must meet with Feinberg in the next two weeks so he can decide whether to lead the mediation process. Feinberg has helped broker and oversee some of the biggest civil settlements in U.S. history.
Bayer, which contends Roundup doesn’t cause cancer, hasn’t shown much interest in jumping into settlement talks before appeals courts consider the company’s arguments that there were flaws in the three California trials it lost. Those appellate reviews, challenging jury verdicts that socked Bayer with more than $2 billion in damages, could take years to complete.
Feinberg, recognized as one of the U.S.’s leading dispute-resolution gurus, was tapped to administer compensation funds for victims of the Sept. 11 attacks and the 2010 BP Plc oil spill in the Gulf of Mexico. He also was hired by Volkswagen AG to oversee compensation for car owners affected by the diesel emissions-cheating scandal.
Bayer fell as much as 1.8% in Frankfurt.
Read More on Ken Feinberg’s Past Cases
Bayer’s lawyers said last week while they’ll participate in mediation in “good faith,” the company still wants to “assess cases over the long term.”
“As this litigation is still in the early stages -- with no cases that have run their course through appeal -- we will also remain focused on defending the safety of glyphosate-based herbicides in court,” Chris Loder, a Bayer spokesman, said Wednesday in an emailed statement.
A lawyer for cancer victims said her team will plan to continue to take cases to trial if Bayer doesn’t engage in negotiations.
“The plaintiffs are always interested in discussing a settlement in order to advance their cases,” said Jennifer Moore, one of the lawyers representing a California man awarded $80 million over his cancer that he blamed on the weed killer.
Chhabria said Wednesday he’d spoken with Feinberg about the Roundup litigation and said he favors putting him in charge of negotiations “if he can do it.” Chhabria rejected the mediators recommended by Bayer and plaintiffs’ attorneys.
Given Bayer’s lack of enthusiasm for settlement talks, Chhabria may see Feinberg as a powerful lever, said Carl Tobias, a University of Richmond professor who teaches about product-liability law.
“In my experience, sometimes companies from outside the U.S. need to get hit in the head with a 2X4 so they’ll wake up and decide its time to settle,” Tobias said. “Ken Feinberg might well be that 2X4.”
Feinberg oversaw a $20 billion fund in the BP case and $1.2 billion recovery in the Sept. 11 case. “The final settlement number in this case will have a B attached to it and he’s comfortable playing in that league,” the professor said.
Tony Sebok, a law professor at Benjamin Cardozo School of Law in New York, said Feinberg is known for coming up with creative and clever ways to untangle thorny legal problems and get recalcitrant litigants to compromise. “He’s known as a careful and thoughtful mediator who can bring people together,” Sebok said.
Bayer’s $2 Billion Roundup Damages Boost Pressure to Settle
Feinberg may have his work cut out for him after a state court jury in Oakland, California, awarded more than $2 billion in damages to an elderly couple this month. Jurors concluded Alva and Alberta Pilliod’s exposure to Roundup that they used for residential landscaping was a “substantial factor” in their non-Hodgkin’s lymphoma and hit the company with the eighth-largest product-defect verdict in U.S. history.
That was Bayer’s third-straight trial loss and prompted some analysts to boost settlement-cost estimates to as much as $10 billion. The company still faces cancer claims by more than 13,000 people. At Wednesday’s hearing, the judge said Bayer must post a bond of $100 million while it challenges the $80 million verdict it lost in his court in March.
What Bloomberg Intelligence Says
“Our litigation analysts calculate a settlement value of $6-$10 billion. The extent to which insurers would participate is difficult to quantify, but we believe they can absorb any exposure because losses may be spread among several carriers that all have policy limits in place and likely have reinsurance protection.”
-- Derek Han, contributing analystClick here to view the piece
Chhabria said he wants to schedule the next trial in his court for February and told lawyers he would like at least 16 other cases to be “ready” for trial in other courthouses in California even sooner.
The litigation has eroded Bayer’s value by more than 40% since the German pharmaceuticals giant acquired agrochemical titan Monsanto for $63 billion in June. Bayer has said all three verdicts are excessive and defended the safety of Roundup’s active ingredient, glyphosate, since inheriting the product from Monsanto.
The case is In re: Roundup Products Liability Litigation, MDL 2741, U.S. District Court, Northern District of California (San Francisco).
(Updates with Bayer shares in fifth paragraph.)
--With assistance from John Lauerman.
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