Bayer shares surge after US Supreme Court blocks thousands of Roundup cancer lawsuits

A decisive 7-2 ruling

The US Supreme Court reined in the sprawling Roundup litigation on Thursday, ruling 7-2 that a federal law governing pesticide labels preempts state-law claims that Bayer failed to warn users about a cancer risk. The decision overturns a Missouri jury verdict that had awarded $1.25 million to John Durnell, a former neighborhood association worker who developed non-Hodgkin's lymphoma after years of using Roundup. The court held that because the US Environmental Protection Agency (EPA) has repeatedly found glyphosate does not cause cancer and approved a label without a cancer warning, additional state-level warning requirements are not allowed under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).

Justice Brett Kavanaugh wrote for the majority, stating that FIFRA 'requires' uniform pesticide labels and that the state failure-to-warn suit would add an extra requirement beyond the EPA-approved label. Justice Ketanji Brown Jackson and Justice Neil Gorsuch dissented. The Trump administration had backed Bayer in the case.

More than a decade of litigation

Bayer acquired Roundup through its $63 billion purchase of Monsanto in 2018 and has since faced a torrent of lawsuits. More than 100,000 plaintiffs have filed cases in US federal and state courts, and the company says about 200,000 claims have been lodged, mostly by home users. Several multibillion-dollar verdicts have been handed down over the years. Bayer has already paid over $10 billion to settle glyphosate-related disputes since 2018 and set aside a total of $16 billion for litigation.

Earlier this year, in February, Bayer proposed a $7.25 billion class-action settlement to resolve tens of thousands of current and future claims. That deal would not affect roughly $1 billion worth of claims that stem from pending appeals or fall outside the settlement's scope. The proposed settlement will be heard in a Missouri state court.

Scientific divide over glyphosate

The safety of glyphosate remains fiercely contested. The World Health Organization's International Agency for Research on Cancer (IARC) classified the chemical as 'probably carcinogenic' in 2015. In contrast, the EPA has consistently concluded that glyphosate is not likely to cause cancer in humans when used according to label directions, and the agency has never required a cancer warning. Bayer and its supporters argue that the EPA's scientific conclusions should govern, while plaintiffs and some health advocates point to the IARC classification as evidence of risk.

Market reaction and Bayer's outlook

Investors welcomed the ruling, sending Bayer shares up as much as 17.3% in Frankfurt, the biggest intraday gain since March 2003. Trading was briefly halted due to volatility. Bayer called the decision 'beneficial for science, farmers and industries that depend on regulatory clarity for innovation' and said the ruling should lead to dismissal of current warning-based claims and bar future ones.

The U.S. Supreme Court decision is good for science, farmers, and industries that depend on regulatory clarity for innovation. It should help significantly contain the Roundup litigation after nearly a decade of legal battles. The ruling should result in the dismissal of current warning-based claims and bar future failure-to-warn claims.

While the ruling is expected to end much of the litigation, Bayer still faces claims not based on failure-to-warn theories. The company has lobbied for state laws shielding it from liability, and three states have already passed such measures.