December 10, 2018
A recent Law 360 story by Bonnie Eslinger, “Attys Get $503M in Fees for Syngenta GMO Corn Settlement,” reports that a Kansas federal judge gave final approval to Syngenta AG’s $1.5 billion deal to resolve claims filed on behalf of 650,000 corn producers over the agricultural giant's genetically modified corn seed, a deal that handed class counsel a $503 million cut. The order from U.S. District Judge John W. Lungstrum noted that the case was "hotly contested," with the merits of the corn producer claims "thoroughly vetted through litigation" in multiple jurisdictions. That litigation included one multiweek class action trial in his court and extensive preparation for other trials.
"This is not a situation in which the parties proceeded quickly to settlement without serious litigation of the claims on their merits, such that there might be reason to suspect that the settlement was not fairly negotiated," the judge wrote. "Indeed, the protracted negotiation process and the vigor with which the parties litigated the merits of the claims provide additional assurance that this agreement was fairly and honestly negotiated."
The litigation winds back to 2014, when corn farmers and others in the corn industry began filing lawsuits, including class actions, against Syngenta over the company's marketing of two insect-resistant GMO corn seed products, Viptera and Duracade, without securing approval from China, according to the court's order.
"The plaintiffs alleged that Syngenta's commercialization of its products caused the genetically-modified corn to be commingled throughout the corn supply in the United States; that China rejected imports of all corn from the United States ... [and] that such rejection caused corn prices to drop in the United States; and that corn farmers and others in the industry were harmed by that market effect," the judge noted.
Hundreds of suits were brought together in the multidistrict litigation heard in Judge Lungstrum's courtroom. The nationwide settlement class is generally divided into four subclasses: corn producers who did not purchase Viptera or Duracade; corn producers who did purchase one of those products; grain handling facilities; and ethanol producers. Of the 650,000 class members, 52 percent have submitted claims and only 17 members properly exercised their right to opt out, and just nine objections by 15 members were submitted in the end, the judge said.
"The fact that the class members have reacted so overwhelmingly in favor of the settlement further supports a finding that the settlement is fair and reasonable and adequate," he said, adding that the court found the objections filed in opposition to the settlement to "lack merit." The judge also said that the immediate payout that the settlement offers — even after the award of one-third of that amount for attorneys' fees — had more value than the "mere possibility of a more favorable outcome after further litigation."
The first trial in the MDL, which won class certification in September 2016, tested the negligence claims of four Kansas farmers representing 7,000 others who believed that Syngenta rushed Viptera seed to market in 2010, willfully ignoring the importance of Chinese regulatory approvals.
The Kansas farmers alleged that varieties of harvested corn were mixed together indiscriminately on their export journey. When China discovered the rogue strain in November 2013, they alleged, it immediately rejected American corn cargo, shutting down the Chinese market for U.S. corn and costing the domestic U.S. industry more than $1 billion. The jury sided with the farmers, finding Syngenta negligent and awarding the class of corn producers $217.7 million in compensatory damages. Syngenta said it planned to appeal.
In July, Judge Lungstrum further consolidated the seven remaining separate state class actions in Arkansas, Illinois, Iowa, Missouri, Nebraska, Ohio and South Dakota. Syngenta then urged the court to certify the $217.7 million verdict as a final judgment, telling Judge Lungstrum in September that it was necessary to prevent needless delay of the company's appeal since it knew the farmers planned to dispute the finality of the verdict. The farmers shot back in October by asking the judge not to sign off on the verdict because the outcomes of other classes could influence the appropriateness of the jury's decision.
The case is In re: Syngenta AG MIR162 Corn Litigation, case number 2:14-md-02591, in the U.S. District Court for the District of Kansas.