WEBVTT - Syngenta Loses First GMO Bellweather Case (Audio)

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<v Speaker 1>A jury has or it Syngenta to pay nearly two

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<v Speaker 1>hundred eighteen million dollars to a group of Kansas farmers

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<v Speaker 1>who claimed the company carelessly marketed its genetically modified corn seed,

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<v Speaker 1>causing the contamination of US crops and the rejection of

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<v Speaker 1>export sales to China. The Kansas City trial is the

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<v Speaker 1>first test case on behalf of some three hundred fifty

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<v Speaker 1>thousand corn growers who are claiming as much as thirteen

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<v Speaker 1>billion dollars in losses. Sin Genta says it did nothing

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<v Speaker 1>wrong and it will appeal the verdict. Our guests are

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<v Speaker 1>Eric Gordon, professor at the University of Michigan Ross School

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<v Speaker 1>of Business, and Anthony Sabino, founding partner of Sabino and Sabino. Eric,

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<v Speaker 1>what were the main issues in the trial? Yeah, it's

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<v Speaker 1>kind of a weird case. Carelessly marketed. Um, here's what happened.

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<v Speaker 1>C Genta develops and sells genetically modified corn seeds. These

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<v Speaker 1>seems have been a huge success in the US despite

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<v Speaker 1>the GMO opponents. It came up with a new seed,

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<v Speaker 1>got it approved in the US, and started selling it

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<v Speaker 1>in the US. Had approval from a lot of countries.

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<v Speaker 1>In fact, countries that accounts for the majority of U

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<v Speaker 1>S corn sales in the prior year. But C Genta

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<v Speaker 1>had not received approval from China, and that's the crux

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<v Speaker 1>of the litigation. So Anthony, what what exactly did the

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<v Speaker 1>jury find here in UH in ruling against C Genta. Well,

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<v Speaker 1>on the one hand, they found for liability on the

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<v Speaker 1>part of c Genta, and again picking up along Eric's

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<v Speaker 1>line of thought, essentially that the jury agreed with the

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<v Speaker 1>plant to farmers that C Genta was careless or possibly

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<v Speaker 1>otherwise misrepresented the status of the Chinese approofs on the corn.

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<v Speaker 1>But what I found more remarkable was that the plant

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<v Speaker 1>to Farmers asked for two seventeen million dollars amages, and

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<v Speaker 1>the jury gave them every penny they wanted. Uh. They

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<v Speaker 1>did not award punitives, but then again, punitives are rarely

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<v Speaker 1>granted in these cases. But what again I found remarkable

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<v Speaker 1>was that the jury clearly believed that the farmers had

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<v Speaker 1>made out a case for every dollar they claimed they

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<v Speaker 1>were owed, and they gave them all those dollars. And

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<v Speaker 1>certainly that says a lot to how persuasive was the

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<v Speaker 1>economic evidence presented by the farmers, And that's something that

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<v Speaker 1>center is going to have to go back to the

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<v Speaker 1>drawing board for these new cases that are coming up

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<v Speaker 1>in a few weeks and a few months, especially with

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<v Speaker 1>the class action so eric as Uh Anthony was just relating.

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<v Speaker 1>Cyngenta faces its next class action in a Minnesota court

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<v Speaker 1>in August, where farmers are seeking more than six hundred

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<v Speaker 1>million dollars. Are the facts any different? There were basically

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<v Speaker 1>the same. You know, the pattern of facts. There are

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<v Speaker 1>two patterns of facts, the pattern of fact in Cyngenta,

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<v Speaker 1>and in a lot of cases it's peculiar in this way.

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<v Speaker 1>The problem is that seeds weren't approved. You couldn't sell

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<v Speaker 1>corn from these seeds in China. The farmers who sued

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<v Speaker 1>and and got the two hundred and seventeen million dollars

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<v Speaker 1>that Anthony mentioned were not farmers who planted those new seeds.

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<v Speaker 1>They were farmers that didn't plant the new seeds. So

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<v Speaker 1>what are they doing in court? Well, it turns out

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<v Speaker 1>that a couple of years after the launch of the

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<v Speaker 1>new seeds, Chinese officials supposedly detected traces of the not

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<v Speaker 1>approved corn in other corn ships from the US and

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<v Speaker 1>China started rejecting millions of tons of US corn shipments.

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<v Speaker 1>The farmers say, even though we actually had nothing to

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<v Speaker 1>do with those seeds, we were hurt because when China

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<v Speaker 1>stopped importing US corn, the price of corn dropped, and

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<v Speaker 1>that price dropped hurt all of us, not just farmers

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<v Speaker 1>who use Cingenters seeds. Now, there are also cases from

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<v Speaker 1>the other side, the farmers that did use the seed.

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<v Speaker 1>But but this this case is interesting not just because

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<v Speaker 1>they got the farmers got every dime they asked for. Um.

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<v Speaker 1>Of course it's you know, corn farmers in Kansas. UM.

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<v Speaker 1>It's also interesting in that the lawsuit is from farmers

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<v Speaker 1>who actually didn't buy the seed. Anthony, this can't be

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<v Speaker 1>good news for Cingenta obviously, to have lost in this

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<v Speaker 1>way and have the jury, as you pointed out, give

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<v Speaker 1>every dollar that the plaintiffs had asked for in its award.

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<v Speaker 1>How is this gonna play out for c Genta. They've

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<v Speaker 1>got all this litigation coming up and in both of

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<v Speaker 1>the areas that Eric was talking about, how do they

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<v Speaker 1>approach these cases going forward? Now? Well, clearly they have

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<v Speaker 1>to readjust their trial strategy because they were not able

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<v Speaker 1>to persuade the jury on the liability issue that there

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<v Speaker 1>were other factors. UH, if I recall correctly, Centa's defense,

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<v Speaker 1>at least in part, was that there were other reasons

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<v Speaker 1>why there was this economic uh decline the corn prices,

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<v Speaker 1>because initially there was a drought that artificially spiked prices.

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<v Speaker 1>When the drought went away, UH, that that spike disappeared. Also,

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<v Speaker 1>Cingenta alleged that the Chinese government was using this rejection

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<v Speaker 1>of the corn as a political tool to control their

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<v Speaker 1>trade balance and had nothing to do with the actual

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<v Speaker 1>efficacy of the seats. The really have to adjust their

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<v Speaker 1>economic evidence to disprove at least diminish the amount of

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<v Speaker 1>damages being asked for. But I think the real practical

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<v Speaker 1>ramification is a following UH. Senta now is going to

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<v Speaker 1>have to very seriously consider and probably initiate immediately settlement

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<v Speaker 1>talks with these other cases, because it's going to be

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<v Speaker 1>very difficult for them to go to trial having lost

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<v Speaker 1>once and certainly it doesn't mean you're gonna lose again. UH.

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<v Speaker 1>No outcome is predetermined, but they're going to be very

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<v Speaker 1>much encouraged, if not compelled, to seek litigation to cut

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<v Speaker 1>off these other litigations at the past and reach a

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<v Speaker 1>settlement before jury. Awards them awards the farmers the same

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<v Speaker 1>or more in uh compensatory not to mention the risk,

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<v Speaker 1>of course of punitives. Eric explain how these bell Weather

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<v Speaker 1>trials work, the complex web of litigation in these cases,

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<v Speaker 1>and whether you agree with Anthony. Yeah, So these bell

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<v Speaker 1>Weather cases are supposed to be picked to be representative

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<v Speaker 1>of the other cases it or on hold, And the

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<v Speaker 1>idea is that they're supposed to be representative in the

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<v Speaker 1>sense that both sides get a reading on what's likely

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<v Speaker 1>to happen in the other cases and get realistic about settling.

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<v Speaker 1>And as Anthony says, you know, it's it looks like

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<v Speaker 1>realism means c Genta will try harder. But it's not

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<v Speaker 1>all bad news for Cingenta. About three quarters of the

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<v Speaker 1>complaint from the farmers had to do with claims that

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<v Speaker 1>Syngenta made all kinds of misrepresentations, failed to give farmers warnings,

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<v Speaker 1>very dangerous claims, and and those claims failed. The judge

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<v Speaker 1>basically through those claims out. So when Centa makes the adjustments,

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<v Speaker 1>it has some good news. Um, but of course it

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<v Speaker 1>has two hundred and seventeen million dollars worth of bad news.

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<v Speaker 1>I want to thank you both for being on Bloomberg

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<v Speaker 1>Law that Professor Eric Gordon of the University of Michigan

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<v Speaker 1>Ross School of Business, and Anthony Sabino, founding partner of

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<v Speaker 1>Sabino and Sabino. Thank you both