The Old Farmer’s Almanac says there is a 50 percent probability that the last frost this spring will be April 30. Conventional wisdom would say that corn-planting season then would start about May 15, two weeks later.
Minnesota’s first bellwether trial on the sale of genetically modified organisms, i.e., corn, should be in the barn by then, given its start date of April 24 in front of Hennepin County District Court Judge Thomas Sipkins.
Syngenta faces bushels of claims from farmers, exporters and others who say that Syngenta sold corn seed known as Viptera and Duracade, which contained a genetic trait known as MIR 162, without the approval of the trait by China. China then rejected all imports of corn from the United States, which caused a massive drop in corn prices, it is alleged. The product was approved for sale in the U.S.
There are two actions in Minnesota before Sipkins, one state consolidated complex litigation proceeding and one state class action, both bringing more or less the same claims under master complaints. Lew Remele is the lead non-class counsel and Dan Gustafson is the lead class counsel in Minnesota. Minnesota companies Cargill and Archer Daniels Midland have a separate lawsuit venued in Louisiana.
On April 11, Sipkins ordered that plaintiffs in both cases could bring claims for punitive damages. Applying a choice of law analysis to the issue of punitive damages where plaintiffs represent various states, the court said that the Minn. Stat. sec. 549.20 standard of deliberate disregard to the rights of plaintiffs would apply to all of them. Thus, the case of Daniel Mensik, a Nebraska resident, on April 24 will include a claim for punitive damages although Nebraska law does not permit punitive damages.
Mensik’s trial will be followed by a bellwether class action MDL trial in federal court in Kansas City, Kansas, scheduled for June 5. The lay of the land on genetically modified corn litigations could be knee-high by the Fourth of July.
Syngenta wanted the Minnesota cases to go to the MDL in Kansas but lost that round, Remele said. Since Swiss-based Syngenta has an office here, in the old Northrup King facility, diversity wasn’t an option for it. Syngenta’s argument that the federal courts should have jurisdiction under the federal common law of foreign relations, because China turned away shipments of corn, was unpersuasive, Remele said.
The parties in Minneapolis case have agreed to a trial length of 35 hours per side — but that was before Sipkins allowed the plaintiffs to claim punitive damages. Given that the global damages claimed from the sale of genetically modified corn by Syngenta Seeds Inc. are in the billions, the punitive damage part of the trial could take some time. For example, the Minnesota class action is seeking $500 million in compensatory damages alone, without considering punitive damage claims. While those kinds of numbers may drive settlement talks, no material discussions have occurred thus far, Gustafson said.
China’s zero tolerance policy
“Biotechnology sits at the heart of this [agribusiness] industry. It holds great promise but can also cause great harm,” pleadings say.
The particular harm alleged in this case is that “Starting in 2010, Syngenta took unreasonable and irresponsible actions to launch two new products containing genetically modified traits before obtaining approval from China, a key export market.
These actions caused the Chinese market to effectively close to U.S. corn shipments.” China and some other nations have a “zero tolerance” policy and will reject grain imports with even a trace amount of an unapproved bioengineered genetic trait, court documents say. For example, in 2013 alone, China refused to accept 2.3 million metric tons of corn exported by Cargill Inc., Remele said.
Not all farmers grew genetically modified corn. But as corn is harvested, stored and shipped it is commingled. Moreover, corn pollen is carried by the wind and a GMO crop can affect non-modified corn in that way. That crop was also embargoed by the Chinese.
The standard practice in the biotech industry is to obtain approvals from all markets before launching a product, Gustafson said.
There is clear and convincing evidence from which a jury could conclude that Syngenta acted with deliberate disregard for the rights or safety of others as required by Minn. Stat. sec. 549.20, the judge said.
“There is evidence that Syngenta was at least disingenuous, perhaps mendacious at worst, about the timing of Chinese approval to induce farmers to buy and plant Viptera,” Sipkins wrote. “Syngenta acted to conceal its actions and shift the blame to the grain trade, or China, or to the farmers themselves for the consequences. Syngenta was willing to risk the loss of the Chinese market for U.S. corn, despite knowledge of the financial consequences that a trade disruption would have on American corn farmers.”
In its brief in opposition to the punitive damage motion, Syngenta argued that “Plaintiffs want the ability to punish Syngenta …for selling a genetically modified (GM) corn seed in the United States that Plaintiffs admit was safe, effective, beneficial to the public, and that had specifically been approved for unrestricted sale by the U.S. Government.” (Emphasis in original.) It argues Syngenta was not reckless because “only a crystal ball could have predicted the chain of events that allegedly harmed Plaintiffs … Failing to foresee the outcome of an opaque regulatory system [in China] cannot qualify as recklessness.”
Syngenta’s arguments against punitive damages may be used to defend against the claim but do not prevent a bar to pleading the claim as a matter of law, the judge said. “The arguments made and brilliantly presented by Syngenta’s counsel ultimately cannot overcome the gatekeeping standard at this stage of the litigation on this issue.”
Counsel for Syngenta could not be reached for comment.