Jurors in the high-stakes, closely watched legal clash between Minnesota corn growers and Syngenta Corp. are hearing conflicting testimony about who cost the farmers an alleged $400-plus million in lost sales — the company’s commercialization of genetically modified seed without Chinese approval or Mother Nature and market forces.
Minnetonka-based Syngenta Seeds Inc. “took a risk on the backs of American farmers” when it began marketing its Agrisure Viptera corn seed before getting China’s OK, attorney Rick Paul, representing farmers in the civil case, told jurors in his opening statement.
Some 22,000 farmers in the class did not plant Viptera seed but were “innocent bystanders in an international trade dispute,” that began when China refused most U.S. corn shipments for three years because of the crop’s commingling with Viptera-grown grain, Paul said.
Minnesota farmers will have lost $402.8 million because of “corn price suppression” from 2013 through 2018 delivery, Paul said, because Syngenta’s launch of Viptera was “too soon, too broad, too much.” Chinese officials also turned away corn grown from Syngenta’s Agrisure Duracade seed, launched for 2014 planting. Both Viptera and Durade eventually received import approvals in China.
Attorney Mike Brock, representing Syngenta, countered in his opening statement that rainfall that spurred a 2013 bumper crop in the Corn Belt caused a drop in corn prices before China began rejecting U.S. corn. After rains in June and July in that year “the bottom dropped out of the price of corn,” Brock said.
“It’s a small market and the market adjusts,” Brock said of U.S. feed corn exports, which account for about 15 percent of the annual yield, with 85 percent going to feed, ethanol production and other domestic uses. “Minnesota farmers were not harmed.”
Testimony in the state class action case against the Swiss-headquartered agribusiness giant began Wednesday, September 13, before Hennepin County District Court Judge Laurie Miller after two days of jury selection. It is one of two actions in Minnesota, the other a state consolidated complex litigation proceeding, with both bringing similar claims under master complaints.
Syngenta maintains that it had full approval to bring Viptera to market from the U.S. Department of Agriculture, Environmental Protection Agency and Food and Drug administration and in key import markets, except China, recommended by the National Corn Growers Association and other groups. Viptera seed, which incorporates a genetic trait known as MIR162, was a key innovation that helped farmers realize yield potential without the use of a chemical pesticide to combat a variety of insects damaging to corn, Brock said.
Brock asked jurors to focus on whether Syngenta’s 2010 launch of Viptera was reasonable under the circumstances that existed in the fall of 2010.
Paul, representing Minnesota farmers, said that Syngenta knew the risk of creating a trade disruption from its 2007 rollout out of another corn seed, known as MIR604/Agrisure RW, without import approvals, which led to a standoff with Japan and Canada. Brock, however, said that Syngenta had approval from U.S. officials to launch that seed and believed it would have approvals from Japan and Canada before the first harvest and shipment of that corn.
China — with a population of more than 1.35 billion people and a need for corn to feed more than 440 million hogs — was seen an increasingly important export market, Paul said.
Paul pointed out that Jack Berens, Syngenta’s head of technology acceptance, stated in a December 2014 email that he had predicted 24 months earlier that grain companies would raise issues with Viptera not having approval in China or the European Union. Berens stated in other emails that, “China may become an issue for unapproved biotech traits” and “this could become a problem for us.”
Brock said that Syngenta acted responsibly in bringing Viptera to market and that growers organizations did not expect the company to have approvals from China or the European Union before the launch because those were not required under the policies of the Biotechnology Industry Organization trade group or growers organizations.
Berens, the trial’s first witness, testified under questioning by plaintiff’s attorney Mikal Watts that concerns arose in 2005 about the company’s ability to produce Viptera seed economically. Viptera got renewed attention in 2007 as a possible response to a competing Monsanto product.
Watts focused on the issue of the foreseeability of China’s rejection of Viptera, returning to it several times in questioning Berens, who responded at one point, “I saw the possibility that could happen.”
Brock, in his opening statement, contended that China does not have a properly functioning regulatory system that “allows control and manipulation of imports” and that results in “substantial delays” so waiting for approval doesn’t make sense. Syngenta officials hold that U.S. companies should not have to depend on approval from China or other foreign governments, in effect giving them veto power over when companies here commercialize new technology.
In April, Hennepin County District Court Judge Thomas Sipkins ordered that plaintiffs in both cases could bring claims for punitive damages. As a result, the case now at trial of Daniel Mensik, a Nebraska resident, can include a claim for punitive damages although Nebraska law does not permit punitive damages.
Syngenta faces thousands of other lawsuits in Minnesota and other states. The company is appealing a June verdict in which a Kansas jury awarded close to $218 million in damages. An Ohio judge in June dismissed a suit against Syngenta, stating that making technological advances of U.S. companies dependent on the approval of foreign governments would have “a chilling effect on those parties investing time and resources into their creation.”
Syngenta is being acquired by state-owned China National Chemical Corp. in a $43 billion deal.