On Wednesday, a Washington state appeals court overturned a $185 million verdict against Bayer's (OTC:BAYRY) Monsanto unit concerning chemical contamination at a school in the Seattle area.
The decision marks the second major legal victory for Bayer in recent weeks, pushing its shares 4.6% higher in Frankfurt.
The case involved Monsanto's spinoff, Pharmacia, which sold polychlorinated biphenyls (PCBs) that were later banned. In 2021, three teachers claimed they suffered brain damage from PCBs leaking from light fixtures at the Sky Valley Education Center in Monroe, Washington.
The appellate court sided with Bayer, ruling that the lower court had incorrectly applied Missouri laws—where Monsanto is headquartered—allowing the claims to be filed long after Monsanto ceased PCB production in 1977. The U.S. banned these chemicals in 1979 due to cancer risks.
The appeals court highlighted errors in the lower court's proceedings, notably its allowance of punitive damages on some claims and certain expert testimonies, emphasizing the significance of these missteps.
According to Monsanto, Wednesday's ruling, which also found that the lower court wrongfully endorsed punitive damages on some claims and allowed certain expert testimony, is “significant,'" and it could affect other related trials.
Bayer contends that under Washington law, liability is limited if exposure occurs outside a product’s useful life, typically 12 years. The case has been remanded for a determination of whether a new trial is warranted.
Plaintiffs' attorney Richard Friedman said they will retry the case if necessary, however, they hope the state Supreme Court will simply reestablish the verdict on appeal.
Bayer is currently facing approximately 200 similar claims from individuals at the school alleging health issues caused by PCB exposure.
"The company will consider its legal options regarding the application of this ruling to other SVEC verdicts that are in conflict with it, as well as how this ruling could affect future trials," said a spokesperson.
Commenting on Bayer’s win, analysts at Jefferies said this is one of many categories of litigation the pharmaceutical giant faces concerning PCBs “ and arguably the one with the greatest risk of swelling to a multiple billion dollar figure (vs. $27bn market cap),”
“We would expect share price support as a result of this decision,” they added.