WEBVTT - Bayer Roundup Suit’s SCOTUS Chances, Risks 0:00:15.480 --> 0:00:18.919 Welcome to the Votes and Verdicts podcast hosted by Bloomberg Intelligence, 0:00:18.960 --> 0:00:22.880 the investment research arm of Bloomberg LP. In this podcast series, 0:00:22.920 --> 0:00:25.560 we talk about the intersection of business policy and law. 0:00:26.000 --> 0:00:28.640 My name is Holly Frome. I'm an analyst with Bloomery 0:00:28.680 --> 0:00:33.440 Intelligence covering consumer and industrials litigation. Today's podcast will focus 0:00:33.440 --> 0:00:37.280 on litigation facing player's monsanto union over sweet Killer round Up. 0:00:37.760 --> 0:00:40.519 I'm delighted to be joined today by Dale Mullen, partner 0:00:40.560 --> 0:00:42.760 and co chair of the Business and Corporate Law section 0:00:42.800 --> 0:00:46.920 of Whiteford Law. Mister Mullen advises clients on regulatory compliance, 0:00:47.080 --> 0:00:52.320 corporate governance, securities and government investigations. He's practiced before regulatory 0:00:52.320 --> 0:00:55.840 agencies such as the SEC, FDA, EPA and FINRA, and 0:00:55.920 --> 0:01:00.000 other agencies and counsel's clients on compliance and enforcement matters 0:01:00.080 --> 0:01:02.800 involving various areas of law. Thank you so much for 0:01:02.920 --> 0:01:04.080 joining us today as Tumalan. 0:01:04.480 --> 0:01:06.000 Thank you, Olli. It's good to be here. 0:01:06.319 --> 0:01:10.240 So jumping right into today's topic. Bear has been sued 0:01:10.240 --> 0:01:13.040 by over one hundred thousand consumers who say it's weak 0:01:13.720 --> 0:01:17.560 killer round up causes non hotchkins fumkoma. Bear has faced 0:01:17.600 --> 0:01:20.959 billions in jury verdicts since twenty eighteen. In twenty twenty eight, 0:01:21.000 --> 0:01:23.760 agreed to pay around eleven billion dollars to resolve around 0:01:23.760 --> 0:01:26.720 one hundred thousand cases. And though Bear withdrew round up 0:01:26.800 --> 0:01:29.920 with gleicosate from the residential market in twenty twenty three, 0:01:30.280 --> 0:01:33.560 there are still about sixty seven thousand cases pending, and 0:01:33.640 --> 0:01:36.880 any residential user will allegedly get sick in the future 0:01:36.920 --> 0:01:40.400 from round up used before twenty twenty three could still sue. 0:01:40.680 --> 0:01:43.399 So Bear filed a petition to the US Supreme Court 0:01:43.480 --> 0:01:46.800 seeking to habit review one point two five million dollar 0:01:46.880 --> 0:01:49.280 births out of Missouri State court in a case called 0:01:49.360 --> 0:01:53.560 Monsanto versus Jurnell. The Missouri court found that state fillerys 0:01:53.640 --> 0:01:56.280 warning things were not prempted by federal passive site law 0:01:56.440 --> 0:01:59.520 otherwise known as Griffra. There's a circuit split among federal 0:01:59.520 --> 0:02:01.720 courts of the appeal on this issue, and the Supreme 0:02:01.720 --> 0:02:04.440 Court agreed to hear the Durnel Hase earlier this year 0:02:04.680 --> 0:02:08.320 and heard arguments on April twenty seven. Its decision on 0:02:08.400 --> 0:02:10.120 the appeal, and they come in June. So, mister Maully, 0:02:10.160 --> 0:02:12.840 can you explain what questions the Supreme Court is deciding. 0:02:13.280 --> 0:02:19.800 Sure, the plainos say that Monsanto should have warned, and 0:02:19.919 --> 0:02:24.640 Monsanto says, the EPA approved its label without a cancer warning, 0:02:25.240 --> 0:02:30.600 and they say federal law then blocks the state based plane. 0:02:30.880 --> 0:02:34.600 And so the federal courts of appeals, as you correctly 0:02:34.600 --> 0:02:38.800 point out, is divided on that question. Who's right. The 0:02:38.840 --> 0:02:42.399 Supreme Court passed on the question once in twenty twenty two, 0:02:42.960 --> 0:02:44.840 but this time they decided to take it up. 0:02:45.000 --> 0:02:47.640 Interesting. So you said that there are two preemption theories 0:02:47.639 --> 0:02:51.160 before the court and they are not equally strong. What 0:02:51.200 --> 0:02:52.600 are they and which is stronger? 0:02:52.840 --> 0:02:55.080 You know, that's a great question. The two theories are 0:02:55.120 --> 0:03:01.519 these express preemption asks whether a state failure to warned 0:03:01.639 --> 0:03:05.720 verdict counts as a labeling requirement that's different from the 0:03:05.720 --> 0:03:12.000 federal label. The second theory is implied conflict preemption, and 0:03:12.040 --> 0:03:15.400 that asks whether Monsanto could even have added the warning 0:03:15.880 --> 0:03:20.600 without breaking federal law. In my opinion, the weaker one 0:03:21.120 --> 0:03:25.200 is the express theory, and that's so because of the 0:03:25.360 --> 0:03:30.959 Court's two thousand and five decision in Bates versus Dow 0:03:31.800 --> 0:03:34.880 and in my opinion, that leaves room for state claims 0:03:34.920 --> 0:03:39.480 that mirror the federal standard. I think the implied theory 0:03:39.640 --> 0:03:43.600 is stronger, and I think it's where the case will 0:03:43.640 --> 0:03:44.040 come out. 0:03:44.560 --> 0:03:47.240 On that first theory. The federal statute says a product 0:03:47.280 --> 0:03:51.720 is misbranded if its warning is inadequate. The EPA hasn't 0:03:51.760 --> 0:03:54.360 pursued Bayer for miss branding and has said that the 0:03:54.400 --> 0:03:57.160 product is actually not misprended. So how can a seat 0:03:57.240 --> 0:04:00.400 jury rigs for failure to warn be went to the 0:04:00.400 --> 0:04:01.840 federal almost branding standard? 0:04:02.160 --> 0:04:05.920 And Holly, that's exactly the difficulty with the express theory, 0:04:06.720 --> 0:04:13.200 and it cuts against Bear fifra. The Federal Insecticide, Fungicide 0:04:13.240 --> 0:04:19.159 and Rodenticide Act its own definition of misbranding includes a 0:04:19.279 --> 0:04:24.200 label that lacks an adequate warning. So if you look 0:04:24.240 --> 0:04:27.520 at a state duty to warn standard, a state duty 0:04:27.560 --> 0:04:31.920 to warn doesn't automatically add something to federal law. It 0:04:31.960 --> 0:04:36.479 could enforce the same standard, But the Bates case protects 0:04:36.480 --> 0:04:40.480 that overlap, and it held that a state claim survives 0:04:40.680 --> 0:04:45.279 if it runs parallel to the federal requirement rather than 0:04:45.520 --> 0:04:50.880 adding it to that requirement. So, in my opinion, Monsanto 0:04:51.200 --> 0:04:56.000 can't win on the text of the express clause by itself. 0:04:56.600 --> 0:05:00.960 It also needs another argument, and that argument is impossibility. 0:05:02.440 --> 0:05:05.920 So can you explain the difference between express preemption versus 0:05:05.960 --> 0:05:07.560 implied conflict preemption. 0:05:08.360 --> 0:05:14.760 Sure, express preemption, Holly is words on the page. Congress 0:05:14.760 --> 0:05:18.600 wrote a clause that says that states can't impose labeling 0:05:18.640 --> 0:05:23.560 requirements different from federal ones, and so the fight is 0:05:23.640 --> 0:05:28.640 over what that sentence reaches. So that's express preemption. What 0:05:28.760 --> 0:05:31.080 are the words on the page say, and how do 0:05:31.160 --> 0:05:36.000 you apply the requirement that states not imposed labeled different 0:05:36.240 --> 0:05:43.120 labeling requirements. Implied conflict preemption, by contrast, is about what 0:05:43.240 --> 0:05:49.160 really happens. Implied conflict preemption is about the reality, and 0:05:49.360 --> 0:05:54.359 implied conflict preemption asks whether a company could actually obey 0:05:55.080 --> 0:06:00.360 state and federal law at the same time. If a 0:06:00.400 --> 0:06:05.640 state jury says you have to add a warning, but 0:06:05.800 --> 0:06:09.520 federal law says you can't change the label without the 0:06:09.600 --> 0:06:13.520 sign off from the agency, then the company is caught 0:06:13.600 --> 0:06:17.760 between two different bodies of law, two different sovereigns, the 0:06:17.800 --> 0:06:22.520 federal sovereign and the state sovereign. That's, in my opinion, 0:06:22.960 --> 0:06:27.240 the stronger ground because it doesn't depend on taking apart 0:06:27.320 --> 0:06:31.320 the words on the page in a single clause. It 0:06:31.360 --> 0:06:35.520 depends on whether or not compliance under that too sovereign 0:06:35.640 --> 0:06:37.400 regime was even. 0:06:37.240 --> 0:06:42.040 Possible, right, So the express preemption provision, that's something that 0:06:42.200 --> 0:06:45.000 you know, I think we've seen in other statutes. So 0:06:45.200 --> 0:06:47.000 we've seen it in the Medical Device Act, and as 0:06:47.000 --> 0:06:50.799 you mentioned, it's in this the Fiffer Act, and it 0:06:50.920 --> 0:06:54.039 was analyzed and beats versus Dow and in that case 0:06:54.080 --> 0:06:56.880 and as well as the Medical Device Act, they're talking 0:06:56.920 --> 0:07:02.360 about how a state requirement will not be preempted if 0:07:02.400 --> 0:07:05.479 it's parallel to the federal laws. So that's why I think, 0:07:05.920 --> 0:07:07.880 you know, what's what you know? I agree with you 0:07:07.920 --> 0:07:12.480 that this is the more interesting, I guess stronger argument 0:07:12.560 --> 0:07:17.080 is that there's this regulation out there that that prevents 0:07:17.440 --> 0:07:21.880 Monsanto from changing the morning without APA approval. But you 0:07:22.000 --> 0:07:27.840 frame this, this this argument, this this implied or possibility 0:07:27.920 --> 0:07:30.119 argument as a fault line between two of the courts 0:07:30.120 --> 0:07:34.080 pharmaceutical decisions why at versus Wellbeing, which I believe was 0:07:34.120 --> 0:07:37.000 two thousand and nine and Plevia versus mess mencing, which 0:07:37.040 --> 0:07:39.280 I think it was from twenty eleven. Can you walk 0:07:39.360 --> 0:07:41.920 us through the difference between between those keys of that 0:07:42.080 --> 0:07:45.080 pork and which side is Bear trying to land on here? 0:07:46.160 --> 0:07:48.520 And Hollway that that I think that frames the argument 0:07:49.320 --> 0:07:52.640 very precisely, and it really turns on what does the 0:07:52.640 --> 0:07:56.080 word different mean and how would that apply here in 0:07:56.120 --> 0:08:02.840 the context of labels, and so in versus Levine and 0:08:02.880 --> 0:08:08.440 then Pleva versus Mensing. To see the gaps, I think 0:08:08.440 --> 0:08:10.400 we have to understand with first. So you look at 0:08:10.480 --> 0:08:15.920 with with Wyath is a brand name drug maker that 0:08:16.240 --> 0:08:19.840 could strengthen its own label on its own initiative. So 0:08:20.160 --> 0:08:23.400 in that case the court said there was no impossibility, 0:08:24.200 --> 0:08:27.600 and in that case they led the failure to warn claim. 0:08:27.840 --> 0:08:34.480 The state based claim proceed In Pleva, the Pliva, a 0:08:34.600 --> 0:08:39.200 generic maker, was locked into a brand label by federal law. 0:08:39.840 --> 0:08:43.200 It could not on its own change it. And so 0:08:43.720 --> 0:08:48.280 in the Pleva case they want and they want on preemption. 0:08:49.200 --> 0:08:52.200 So it seems to me that Monsanto wants to be 0:08:52.800 --> 0:08:56.080 the generic. It wants to be the Pleva case, it 0:08:56.160 --> 0:08:59.480 wants to say it was locked on to the EPA 0:08:59.520 --> 0:09:03.800 approved could not add a cancer warning on its own, 0:09:04.600 --> 0:09:09.360 and that's where the strength of that argument lies. The plaintiffs, 0:09:09.440 --> 0:09:13.880 on the other hand, want Monsanto to be the brand 0:09:14.320 --> 0:09:17.800 a company that could have asked to strengthen the label 0:09:18.400 --> 0:09:23.640 and chose not to. And so the gap between with 0:09:24.160 --> 0:09:28.800 and Cleva, is whether or not a failure to warn 0:09:28.920 --> 0:09:34.720 plane can proceed because the company and with a drug maker, 0:09:36.120 --> 0:09:39.520 could could you strengthen the label on your own? Or 0:09:40.200 --> 0:09:43.080 is it more like the Pleva case. Is it a 0:09:43.120 --> 0:09:47.439 generic maker who's locked into a particular brand label by 0:09:47.559 --> 0:09:51.880 federal laws. That's the disconnect that the Supreme Court has 0:09:51.920 --> 0:09:52.320 to solve. 0:09:53.080 --> 0:09:56.240 Yeah, it's it seems to fall squarely between those two cases. 0:09:56.280 --> 0:09:58.760 So that's why you know it's been it's not so 0:09:58.840 --> 0:10:00.920 easy to predict which way judges will lead it if 0:10:00.960 --> 0:10:04.200 they're going to decide based on impossibility preemption. But what 0:10:04.280 --> 0:10:07.680 do you think is the single fact that decides which 0:10:07.679 --> 0:10:10.920 of those two cases bear resembles most you. 0:10:10.880 --> 0:10:15.439 Know, in my opinion, it's whether or not Monsanto ever 0:10:15.840 --> 0:10:21.040 asked the EPA to add a cancer warning. In the 0:10:21.559 --> 0:10:25.560 With case, the test was whether there was clear evidence 0:10:25.600 --> 0:10:30.400 that the agency would have rejected the stronger warning. So 0:10:30.520 --> 0:10:34.520 if Monsanto could have but did not ask to add 0:10:34.520 --> 0:10:37.720 a cancer warning, then I think that the needle falls 0:10:37.800 --> 0:10:42.200 more in favor of not being locked into a particular warning. 0:10:43.640 --> 0:10:47.760 If mon Santo never asked, then there's no and then 0:10:48.000 --> 0:10:51.040 there could be no clear evidence of refusal and the 0:10:51.120 --> 0:10:56.080 company looks like the brand name maker in the wife 0:10:56.200 --> 0:11:01.800 case and not locked in to the generic. In my opinion, 0:11:02.679 --> 0:11:06.520 the case will turn on that fact. It's that hinge 0:11:06.960 --> 0:11:09.280 of the impossibility argument. 0:11:10.080 --> 0:11:15.319 So I don't think they asked, but they do need 0:11:15.440 --> 0:11:21.480 agency approval, so an argument just justice. 0:11:21.520 --> 0:11:25.000 Course. Itch asked Bear's lawyer how the company can claim 0:11:25.040 --> 0:11:28.040 it's impossible to add a warning when the e p 0:11:28.200 --> 0:11:31.960 A at one point permitted a cancer warning or permitted 0:11:32.360 --> 0:11:36.679 there to modify its labeled and Beyer called those Bear 0:11:36.760 --> 0:11:39.320 had said that the e p A said, Bears lawyer 0:11:39.400 --> 0:11:42.280 said that the EPA said that those were implementation mistakes. So, 0:11:42.520 --> 0:11:48.679 in other words, the e p A implemented its regulations incorrectly. 0:11:49.160 --> 0:11:53.240 Do you think based on these facts they could still 0:11:53.240 --> 0:11:56.240 claim impossibility if they were, you know, the EPA never 0:11:56.280 --> 0:11:58.480 went out for them for modifying the label on a song, 0:11:58.720 --> 0:11:58.920 you know. 0:11:59.000 --> 0:12:02.280 And that's a tough one. It's a tough one because 0:12:03.440 --> 0:12:08.160 the answer does seem to concede that a warning may 0:12:08.200 --> 0:12:11.120 have once been on the table, and the moment that 0:12:11.160 --> 0:12:16.280 the warning was achievable, the impossibility story is harder to tell. 0:12:16.440 --> 0:12:21.000 I think that question was one of the clearest moments 0:12:21.040 --> 0:12:23.199 of and you can tell a little bit from questions 0:12:23.200 --> 0:12:26.280 that are asked. You certainly can't tell everything, and sometimes 0:12:26.280 --> 0:12:30.480 you guess it gets wrong in the context of appellet arguments. 0:12:30.920 --> 0:12:36.960 But if compliance was truly impossible, why did the EPA 0:12:37.040 --> 0:12:42.600 at one point allow a cancer warning? Again, Bear's answer 0:12:42.880 --> 0:12:45.319 is fair and probably right that that might have been 0:12:45.320 --> 0:12:51.439 an implementation incongruence from the agency, that the EPA misapplied 0:12:51.440 --> 0:12:54.920 its own rules. That answer could be accurate, and it 0:12:54.920 --> 0:12:59.000 seems fair, but it does concede that a warning may 0:12:59.000 --> 0:13:02.480 have it once been on the table, and the minute 0:13:02.520 --> 0:13:06.040 that you show that that warning was achievable, even if 0:13:06.040 --> 0:13:09.520 for a moment, it's really hard to continue the through 0:13:09.600 --> 0:13:12.920 line of impossibility. And I think that that's why that 0:13:12.920 --> 0:13:15.719 that question deserves some special attention. 0:13:15.600 --> 0:13:19.480 Here, right, So you know, I think what's interesting though, 0:13:19.640 --> 0:13:23.840 is that it's the answer, you know, whether this whether 0:13:23.880 --> 0:13:27.920 they could add a warning, or whether or whether the the. 0:13:27.920 --> 0:13:32.520 EPA would have forbidden it's it's changed from administration to administration. 0:13:32.640 --> 0:13:36.800 So even you know, you know, the lawyer Purveyor said 0:13:37.200 --> 0:13:40.800 to Justice Corsage, well, you know, the positions of the 0:13:40.800 --> 0:13:43.720 administration have changed because someone spot you back because they 0:13:43.760 --> 0:13:47.240 have changed. So I think, you know, it's interesting to 0:13:48.000 --> 0:13:51.679 as you know, the manufacturers put in a position where 0:13:52.240 --> 0:13:55.280 they could be in trouble depending on which administration is 0:13:55.280 --> 0:13:58.240 is you know, an office, So I think that's that's 0:13:58.280 --> 0:14:03.400 also another you know question that remains open is you know, 0:14:03.520 --> 0:14:07.040 if it's if it's if it if the answer depends 0:14:07.080 --> 0:14:09.640 on which administration is in office, that's going to be 0:14:10.240 --> 0:14:10.840 a problem. 0:14:11.240 --> 0:14:16.280 But you you pointed out that Justice Gorsich also he 0:14:16.400 --> 0:14:18.839 dealt with this when he dealt with something similar when 0:14:18.880 --> 0:14:23.440 he was on the tense circuit, I believe, and he 0:14:23.560 --> 0:14:27.400 dealt with the case the impossibility the impossibility argument was raised. 0:14:27.640 --> 0:14:29.960 What what what was that case? Then? Why does it 0:14:30.000 --> 0:14:30.480 matter now? 0:14:30.920 --> 0:14:32.800 Holly? I think you brought it up first, and I 0:14:32.840 --> 0:14:36.480 think you were right to if you well, First, I 0:14:36.520 --> 0:14:40.320 will acknowledge that elections do have consequence, regardless of the 0:14:40.360 --> 0:14:44.680 side of the aisle that one prefers, elections definitely have consequence, 0:14:44.680 --> 0:14:49.440 and the e p A under one administration is different 0:14:49.520 --> 0:14:53.280 than dealing with the e p A during another administration. 0:14:53.440 --> 0:14:55.720 We'll set aside whether that could be the case for 0:14:55.760 --> 0:15:00.720 another call. But you had brought up medical devices and 0:15:01.400 --> 0:15:04.600 back in twenty fifteen, as you correctly recall, on the 0:15:04.640 --> 0:15:11.040 Tenth Circuit, then Judge Gorsicic wrote an opinion in Kaplinger 0:15:11.280 --> 0:15:17.880 versus Medtronic, different statute medical devices, but a nearly identical 0:15:17.920 --> 0:15:22.960 preemption clause in both, and the same core problem that 0:15:23.000 --> 0:15:25.480 the court has to sort out. And that problem is this, 0:15:26.440 --> 0:15:29.440 how can a state require a company to change a 0:15:29.520 --> 0:15:35.000 label that federal law forbids it to change without agency approval? 0:15:35.520 --> 0:15:39.680 That's a tough question. So how can a state require 0:15:39.720 --> 0:15:42.400 a company to change a label that federal law forbids 0:15:42.400 --> 0:15:46.960 it to change without agency approval? Was tackled in the 0:15:47.440 --> 0:15:53.600 Kaplinger versus Medtronic case. Then Judge Gorsic called this the 0:15:54.080 --> 0:15:58.040 main problem, the central conundrum to this. In that case, 0:15:58.640 --> 0:16:00.480 I think it's fair to say that he read the 0:16:00.480 --> 0:16:05.840 federal preemption clause pretty broadly. So when you see now 0:16:06.160 --> 0:16:12.360 Justice Gorsuch pressed Bear's lawyer about the cancer warning the 0:16:12.440 --> 0:16:17.280 EPA once permitted, it wasn't just him improvising from the bench. 0:16:18.840 --> 0:16:22.560 What I saw was a testing of that same central 0:16:22.640 --> 0:16:28.520 question identified over ten years ago. So the federal circuits 0:16:29.160 --> 0:16:33.360 have been circling this problem for a long time. The 0:16:33.400 --> 0:16:39.320 difference may be now is that regardless of how Justice 0:16:39.680 --> 0:16:44.280 Gorsich decides to answer it, he probably has the votes 0:16:45.080 --> 0:16:49.720 on the Supreme Court to answer that question for industry. 0:16:50.880 --> 0:16:56.320 Interesting, So, if the court rules in favor of Monsanto 0:16:56.400 --> 0:16:59.800 on one of these theories, what exposure remains for months 0:16:59.840 --> 0:17:02.840 in to and for other companies who's pesticide products allegedly 0:17:02.880 --> 0:17:03.840 injure a user. 0:17:04.920 --> 0:17:08.440 I think it's important to say here we have two 0:17:08.440 --> 0:17:13.040 different statutes. The one was a device Statute, not FIFFRA. 0:17:13.960 --> 0:17:16.240 This is the first time to my recollection that it's 0:17:16.240 --> 0:17:21.439 been addressed in the context of FIFFRA, the FIFRA, the 0:17:21.480 --> 0:17:27.040 Federal Insect Fungus Side and Rodenticide Act. But your question is, 0:17:27.880 --> 0:17:31.879 if the court rules in favor of Monsanto, then what 0:17:32.040 --> 0:17:40.879 exposure still remained? And a win here on labeling should 0:17:40.920 --> 0:17:44.359 not be seen, in my opinion, as a win on everything. 0:17:45.720 --> 0:17:51.640 Even if Monsanto wins, Even if Monsanto's view prevails, plaintiffs 0:17:51.920 --> 0:17:58.359 who used the product before twenty twenty three could probably 0:17:58.440 --> 0:18:03.880 still sue. And that's because the EPA's separate authority over 0:18:03.920 --> 0:18:08.959 how pest aside is sold and used doesn't necessarily go away, 0:18:10.119 --> 0:18:13.600 and the ruling here would be about warnings and not 0:18:13.720 --> 0:18:18.840 about whether the product was defectively designed. So even if 0:18:18.840 --> 0:18:25.440 the headline is in the Durnell case that Monsanto has 0:18:25.480 --> 0:18:28.720 a win, I don't think that it's fair to say 0:18:28.760 --> 0:18:30.800 that the litigation is over. 0:18:32.640 --> 0:18:35.200 You got it, So there's still these other claims out there. 0:18:35.880 --> 0:18:40.000 You talked about defective design. I always wondered, you know, 0:18:40.880 --> 0:18:45.240 Beyer had said it oral argument that defective design, you know, 0:18:45.480 --> 0:18:48.919 is that planets would still have this defective design theory. 0:18:49.359 --> 0:18:52.679 But I always wondered if impossibility prints the failure to 0:18:52.760 --> 0:18:57.440 warn claim, because there can't change the label without EPA approval, 0:18:58.000 --> 0:19:01.119 why wouldn't design defect claims bempted as well? 0:19:02.880 --> 0:19:05.680 And that's a smart question, and that's one that investors 0:19:05.680 --> 0:19:08.360 should watch for. And that depends on how the opinion 0:19:08.760 --> 0:19:14.440 gets written. The Court doesn't necessarily have to reach any 0:19:14.520 --> 0:19:20.359 design defect claims to decide this case. The question presented 0:19:21.000 --> 0:19:25.560 to the Supreme Court is one that's limited to labeling. Now, 0:19:25.880 --> 0:19:31.239 the reasoning may be equally applicable across claims, but a 0:19:31.320 --> 0:19:38.560 manufacturer can't also change a pasticides formulation without EPA approval. 0:19:39.119 --> 0:19:42.800 So if it's ruled impossible in this case, or if 0:19:42.840 --> 0:19:47.320 the ruling points towards impossibility, the same logic that protects 0:19:47.320 --> 0:19:51.720 the label could protect the design. And so I think 0:19:51.840 --> 0:19:58.480 for investors listening to the Bloomberg podcast, the thing to 0:19:58.600 --> 0:20:05.240 watch in Durnell is whether the opinion that actually gets 0:20:05.280 --> 0:20:11.360 written by the Supreme Court is written pretty narrowly or 0:20:11.920 --> 0:20:16.080 written in a way that invites a new wave of defenses. 0:20:17.240 --> 0:20:20.640 If the Court takes the path of writing a narrow opinion, 0:20:21.160 --> 0:20:26.000 which it frequently does, then that settles exactly one claim 0:20:26.320 --> 0:20:32.720 and arguably other claims like it. A broader opinion could 0:20:32.760 --> 0:20:37.919 potentially rewrite the company's playbook for the whole product and 0:20:38.000 --> 0:20:42.200 the defense on the design defect claims. So that really 0:20:42.200 --> 0:20:44.920 turns holly on how does the court write the opinion 0:20:45.680 --> 0:20:50.600 and how does that opinion address impossibility? Understanding that you 0:20:50.640 --> 0:20:55.200 can't change labeling without prior EPA approval, but you also 0:20:55.280 --> 0:21:00.240 can't change formulation, and so investors should watch for whether 0:21:00.240 --> 0:21:03.360 it's a narrow decision or whether it's a bit broader 0:21:03.560 --> 0:21:04.160 a decision. 0:21:04.600 --> 0:21:07.800 Got it, So you have made the point that this 0:21:07.920 --> 0:21:11.720 courtroom is only half the board. Tell us about the 0:21:11.760 --> 0:21:14.560 other the Farm Bill and what Congress almost did. 0:21:15.080 --> 0:21:18.800 You know, the House version of the Farmville Or originally 0:21:18.840 --> 0:21:24.560 contained provisions that would have codified nationwide label uniformity and 0:21:24.680 --> 0:21:29.240 really cut back curtailed state and local authority over pesticides 0:21:29.760 --> 0:21:33.639 that provides good predictability for the market's, good predictability for 0:21:33.760 --> 0:21:40.400 the industry, and uniformity across a category of federally regulated activities. 0:21:40.480 --> 0:21:43.320 So the House version had those provisions that would have 0:21:43.359 --> 0:21:50.000 codified nationwide label uniformity on the floor, those provisions were stripped. 0:21:50.680 --> 0:21:54.920 So right now there's a legislative path open. But I 0:21:54.920 --> 0:21:58.920 would argue unresolved that runs in parallel to the litigation. 0:21:59.760 --> 0:22:07.719 So anyone modeling an outcome in this case, the Durnell 0:22:07.840 --> 0:22:11.680 case at the Supreme Court by itself, is only really 0:22:11.720 --> 0:22:14.280 seeing half of the picture. The other half of the 0:22:14.320 --> 0:22:18.600 picture of what might happen with the Farm Bill and 0:22:19.160 --> 0:22:23.480 whether or not we will see an era of statutory 0:22:23.640 --> 0:22:27.280 or codified nationwide label uniformity. 0:22:27.760 --> 0:22:30.600 So you said those udicory provisions were stripped from the 0:22:30.640 --> 0:22:33.760 House bill, how likely it is? How likely is it 0:22:33.800 --> 0:22:36.520 that comparable language can come back through the Senate. 0:22:36.840 --> 0:22:39.280 I think what I would tell investors is that it's 0:22:39.320 --> 0:22:43.040 a live issue. I don't know what the head count 0:22:43.080 --> 0:22:47.200 would be on votes in the Senate. But the same 0:22:47.359 --> 0:22:54.439 industry that is litigating this question is also lobbying the 0:22:54.480 --> 0:22:59.000 House and Senate, And a legislative fix just could do 0:22:59.119 --> 0:23:03.439 something that the could not, and that's to reach sale 0:23:03.480 --> 0:23:07.240 and use authority and not just labels. So I think 0:23:07.280 --> 0:23:10.880 that the Senate track in this case deserves as much 0:23:10.880 --> 0:23:13.440 attention as the Supreme Court docket. 0:23:14.800 --> 0:23:18.119 Interesting, so you said that this decision affects whether a 0:23:18.200 --> 0:23:22.440 registrants label compliance history strengthens or weekends of preaction defends 0:23:22.440 --> 0:23:25.560 for companies downstream, can you explain for our listeners what 0:23:25.600 --> 0:23:26.119 that means? 0:23:26.920 --> 0:23:32.080 Sure, it's all about the pay per trail the registrant, 0:23:32.119 --> 0:23:34.760 whether it's the product or the label, the pay per 0:23:34.800 --> 0:23:38.359 trail and the registrant's adherence to that paper trail with 0:23:38.400 --> 0:23:42.959 the EPA becomes a balance sheet asset or a balance 0:23:43.000 --> 0:23:48.440 sheet liability. The cleaner the record showing the agency approved 0:23:48.440 --> 0:23:52.520 the label and declined a stronger warning, the stronger the 0:23:52.560 --> 0:23:56.639 impossibility defense. And not just for the registrate, but for 0:23:56.720 --> 0:24:01.320 the distributors and the formulators downstream also rely on that 0:24:01.400 --> 0:24:06.400 same label. So after this ruling, investors need to pay 0:24:06.400 --> 0:24:11.159 attention to the supply agreements, the indemnity terms in this sector, 0:24:12.240 --> 0:24:16.520 because those can and should be all repriced around exactly 0:24:16.600 --> 0:24:21.960 that question, whose compliance history carries the pre engine defense 0:24:22.480 --> 0:24:25.000 and who is exposed if it fails. 0:24:25.520 --> 0:24:28.480 So for an investor trying to determine what the impact is, 0:24:28.520 --> 0:24:30.840 what's the difference between a narrow in for mayor and 0:24:30.880 --> 0:24:31.480 a broad one? 0:24:32.080 --> 0:24:36.200 And again that's the main question, right, narrow wind preempts 0:24:36.200 --> 0:24:39.040 of failure to Warren verdict and not a whole lot else. 0:24:40.760 --> 0:24:44.560 The tail of the pre twenty twenty three cases could survive, 0:24:45.359 --> 0:24:49.440 design defect theories could survive, and plaintiffs are very adaptive. 0:24:49.640 --> 0:24:53.280 Plainiffs are going to adapt to that strategy. That's in 0:24:53.320 --> 0:24:58.240 a narrow win. If it's more broadly written one written 0:24:58.240 --> 0:25:03.000 on impossibility grounds that could potentially reach formulation as well 0:25:03.000 --> 0:25:06.320 as labeling starts to look a whole lot like in industry, 0:25:06.359 --> 0:25:09.680 while immunity for EPA approved products, and that's a big 0:25:09.680 --> 0:25:13.000 deal for investors who are trying to price out what 0:25:13.080 --> 0:25:17.040 exactly does this mean in a market? So a narrow wind, 0:25:18.560 --> 0:25:21.280 you still got this tale of pre twenty twenty three cases, 0:25:21.720 --> 0:25:28.080 a much broader decision, one that makes impossibility grounds a 0:25:28.160 --> 0:25:32.840 real defense would start to look a lot like industry 0:25:32.840 --> 0:25:34.000 wide immunity. 0:25:34.960 --> 0:25:37.320 So beyond Beyer, who else should be paying attention? What 0:25:37.359 --> 0:25:40.439 other companies or sectors do you think this ruling will reach? 0:25:41.119 --> 0:25:45.840 This ruling could potentially reach in in company that sells 0:25:45.960 --> 0:25:52.080 a federally regulated product under an agency approved label. That 0:25:52.119 --> 0:25:57.040 could extend to pesticides, to crop science companies, But the 0:25:57.200 --> 0:26:03.240 logic of agency approval as a regulatory shield could extend 0:26:03.280 --> 0:26:08.679 to other registrant industries that operate under a single federal label. 0:26:09.720 --> 0:26:13.000 Remember that the FIFTHRA is only one of the many 0:26:13.080 --> 0:26:17.720 programs under US EPA requiring labeling requirement that that holds 0:26:17.760 --> 0:26:23.840 labeling requirements. And EPA is only one of many federal 0:26:23.880 --> 0:26:29.399 agencies that have labeling requirements. So how far would it reach? Holly? 0:26:29.640 --> 0:26:33.520 It could reach any company that sells a federally regulated 0:26:33.560 --> 0:26:37.439 product under an agency approved label. 0:26:38.080 --> 0:26:41.399 Wow, okay, so we're they We're all going to be 0:26:41.400 --> 0:26:44.160 watching for this decision. You said you expect a decision 0:26:44.160 --> 0:26:46.120 by late June. Why that timing? 0:26:47.119 --> 0:26:52.760 That timing hotly? Because the case was argued April twenty seven. It's, 0:26:54.000 --> 0:26:56.600 in my opinion, one of the marquee cases. It's one 0:26:56.600 --> 0:27:00.480 of the biggest cases in administrative law currently pending before 0:27:00.480 --> 0:27:04.679 this session of the Supreme Court, and the court tends 0:27:04.720 --> 0:27:08.280 to clear out the highest profile opinions before they recess, 0:27:08.920 --> 0:27:12.040 and so I would expect that decision in the final 0:27:12.080 --> 0:27:13.560 weeks of the term. 0:27:14.000 --> 0:27:16.639 And so you don't have a crystal ball, but you 0:27:16.760 --> 0:27:19.760 looked at this very closely. Where you come out, what's 0:27:19.760 --> 0:27:22.200 your best read on how the court rules and what 0:27:22.280 --> 0:27:26.320 should listeners take away and warning the opinion drops. 0:27:27.040 --> 0:27:28.920 Well, we'll see if I'm right or wrong. I don't 0:27:29.080 --> 0:27:33.479 ordinarily make predictions, but I will say this. My best 0:27:33.520 --> 0:27:40.840 prediction is narrow reversal. Why because that's generally what a 0:27:40.960 --> 0:27:44.199 court rights is a narrow opinion on a case that 0:27:44.359 --> 0:27:46.679 is reversed. And so I'm going to predict two things, 0:27:47.160 --> 0:27:50.879 a narrow ruling and a reversal. I think the Court 0:27:50.960 --> 0:27:58.200 rules for Monsanto on express preemption. I think they distinguish 0:27:58.320 --> 0:28:01.760 debates case rather than over rule it. And I think 0:28:01.800 --> 0:28:05.560