Speaker 1: A jury has or it Syngenta to pay nearly two
Speaker 1: hundred eighteen million dollars to a group of Kansas farmers
Speaker 1: who claimed the company carelessly marketed its genetically modified corn seed,
Speaker 1: causing the contamination of US crops and the rejection of
Speaker 1: export sales to China. The Kansas City trial is the
Speaker 1: first test case on behalf of some three hundred fifty
Speaker 1: thousand corn growers who are claiming as much as thirteen
Speaker 1: billion dollars in losses. Sin Genta says it did nothing
Speaker 1: wrong and it will appeal the verdict. Our guests are
Speaker 1: Eric Gordon, professor at the University of Michigan Ross School
Speaker 1: of Business, and Anthony Sabino, founding partner of Sabino and Sabino. Eric,
Speaker 1: what were the main issues in the trial? Yeah, it's
Speaker 1: kind of a weird case. Carelessly marketed. Um, here's what happened.
Speaker 1: C Genta develops and sells genetically modified corn seeds. These
Speaker 1: seems have been a huge success in the US despite
Speaker 1: the GMO opponents. It came up with a new seed,
Speaker 1: got it approved in the US, and started selling it
Speaker 1: in the US. Had approval from a lot of countries.
Speaker 1: In fact, countries that accounts for the majority of U
Speaker 1: S corn sales in the prior year. But C Genta
Speaker 1: had not received approval from China, and that's the crux
Speaker 1: of the litigation. So Anthony, what what exactly did the
Speaker 1: jury find here in UH in ruling against C Genta. Well,
Speaker 1: on the one hand, they found for liability on the
Speaker 1: part of c Genta, and again picking up along Eric's
Speaker 1: line of thought, essentially that the jury agreed with the
Speaker 1: plant to farmers that C Genta was careless or possibly
Speaker 1: otherwise misrepresented the status of the Chinese approofs on the corn.
Speaker 1: But what I found more remarkable was that the plant
Speaker 1: to Farmers asked for two seventeen million dollars amages, and
Speaker 1: the jury gave them every penny they wanted. Uh. They
Speaker 1: did not award punitives, but then again, punitives are rarely
Speaker 1: granted in these cases. But what again I found remarkable
Speaker 1: was that the jury clearly believed that the farmers had
Speaker 1: made out a case for every dollar they claimed they
Speaker 1: were owed, and they gave them all those dollars. And
Speaker 1: certainly that says a lot to how persuasive was the
Speaker 1: economic evidence presented by the farmers, And that's something that
Speaker 1: center is going to have to go back to the
Speaker 1: drawing board for these new cases that are coming up
Speaker 1: in a few weeks and a few months, especially with
Speaker 1: the class action so eric as Uh Anthony was just relating.
Speaker 1: Cyngenta faces its next class action in a Minnesota court
Speaker 1: in August, where farmers are seeking more than six hundred
Speaker 1: million dollars. Are the facts any different? There were basically
Speaker 1: the same. You know, the pattern of facts. There are
Speaker 1: two patterns of facts, the pattern of fact in Cyngenta,
Speaker 1: and in a lot of cases it's peculiar in this way.
Speaker 1: The problem is that seeds weren't approved. You couldn't sell
Speaker 1: corn from these seeds in China. The farmers who sued
Speaker 1: and and got the two hundred and seventeen million dollars
Speaker 1: that Anthony mentioned were not farmers who planted those new seeds.
Speaker 1: They were farmers that didn't plant the new seeds. So
Speaker 1: what are they doing in court? Well, it turns out
Speaker 1: that a couple of years after the launch of the
Speaker 1: new seeds, Chinese officials supposedly detected traces of the not
Speaker 1: approved corn in other corn ships from the US and
Speaker 1: China started rejecting millions of tons of US corn shipments.
Speaker 1: The farmers say, even though we actually had nothing to
Speaker 1: do with those seeds, we were hurt because when China
Speaker 1: stopped importing US corn, the price of corn dropped, and
Speaker 1: that price dropped hurt all of us, not just farmers
Speaker 1: who use Cingenters seeds. Now, there are also cases from
Speaker 1: the other side, the farmers that did use the seed.
Speaker 1: But but this this case is interesting not just because
Speaker 1: they got the farmers got every dime they asked for. Um.
Speaker 1: Of course it's you know, corn farmers in Kansas. UM.
Speaker 1: It's also interesting in that the lawsuit is from farmers
Speaker 1: who actually didn't buy the seed. Anthony, this can't be
Speaker 1: good news for Cingenta obviously, to have lost in this
Speaker 1: way and have the jury, as you pointed out, give
Speaker 1: every dollar that the plaintiffs had asked for in its award.
Speaker 1: How is this gonna play out for c Genta. They've
Speaker 1: got all this litigation coming up and in both of
Speaker 1: the areas that Eric was talking about, how do they
Speaker 1: approach these cases going forward? Now? Well, clearly they have
Speaker 1: to readjust their trial strategy because they were not able
Speaker 1: to persuade the jury on the liability issue that there
Speaker 1: were other factors. UH, if I recall correctly, Centa's defense,
Speaker 1: at least in part, was that there were other reasons
Speaker 1: why there was this economic uh decline the corn prices,
Speaker 1: because initially there was a drought that artificially spiked prices.
Speaker 1: When the drought went away, UH, that that spike disappeared. Also,
Speaker 1: Cingenta alleged that the Chinese government was using this rejection
Speaker 1: of the corn as a political tool to control their
Speaker 1: trade balance and had nothing to do with the actual
Speaker 1: efficacy of the seats. The really have to adjust their
Speaker 1: economic evidence to disprove at least diminish the amount of
Speaker 1: damages being asked for. But I think the real practical
Speaker 1: ramification is a following UH. Senta now is going to
Speaker 1: have to very seriously consider and probably initiate immediately settlement
Speaker 1: talks with these other cases, because it's going to be
Speaker 1: very difficult for them to go to trial having lost
Speaker 1: once and certainly it doesn't mean you're gonna lose again. UH.
Speaker 1: No outcome is predetermined, but they're going to be very
Speaker 1: much encouraged, if not compelled, to seek litigation to cut
Speaker 1: off these other litigations at the past and reach a
Speaker 1: settlement before jury. Awards them awards the farmers the same
Speaker 1: or more in uh compensatory not to mention the risk,
Speaker 1: of course of punitives. Eric explain how these bell Weather
Speaker 1: trials work, the complex web of litigation in these cases,
Speaker 1: and whether you agree with Anthony. Yeah, So these bell
Speaker 1: Weather cases are supposed to be picked to be representative
Speaker 1: of the other cases it or on hold, And the
Speaker 1: idea is that they're supposed to be representative in the
Speaker 1: sense that both sides get a reading on what's likely
Speaker 1: to happen in the other cases and get realistic about settling.
Speaker 1: And as Anthony says, you know, it's it looks like
Speaker 1: realism means c Genta will try harder. But it's not
Speaker 1: all bad news for Cingenta. About three quarters of the
Speaker 1: complaint from the farmers had to do with claims that
Speaker 1: Syngenta made all kinds of misrepresentations, failed to give farmers warnings,
Speaker 1: very dangerous claims, and and those claims failed. The judge
Speaker 1: basically through those claims out. So when Centa makes the adjustments,
Speaker 1: it has some good news. Um, but of course it
Speaker 1: has two hundred and seventeen million dollars worth of bad news.
Speaker 1: I want to thank you both for being on Bloomberg
Speaker 1: Law that Professor Eric Gordon of the University of Michigan
Speaker 1: Ross School of Business, and Anthony Sabino, founding partner of
Speaker 1: Sabino and Sabino. Thank you both