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