Bayer Fouled U.S. Long-Grain Rice Crop, Causing Export Plunge, Jury Told

A Bayer AG unit carelessly contaminated U.S. long-grain rice fields with its genetically engineered seed, causing a dive in exports to Europe, a lawyer for a Louisiana grower told jurors at the end of a trial.

The rice growers’ “reputation for producing a pure product was destroyed, with the export market lost,” attorney Don Downing told the federal court jury today in St. Louis. “It was Bayer’s carelessness, and Danny Deshotels was hurt,” said Downing, who represents the Deshotels family and its rice- growing business.

The trial is the fifth against the German company and its Bayer CropScience unit over rice crop contamination in the southern U.S. Bayer has lost four trials so far, two in state court and two in federal, for a total of more than $52 million in jury awards.

The company faces about 500 additional lawsuits in federal and state courts with claims by 6,600 plaintiffs, Greg Coffey, a Bayer CropScience spokesman, said in a phone interview today. A sixth case is scheduled to begin trial July 19 in state court in Arkansas, followed by a federal trial in St. Louis in October, he said.

Farmers in five states claim the company and Bayer CropScience negligently contaminated the U.S. long-grain rice crop with its genetically modified LibertyLink seed, leading to export restrictions, bans on two kinds of high-yield seeds and a plunge in prices.

Bayer, based in Leverkusen, Germany, denies negligence and disputes the damages claims, contending that rice sales rebounded after an initial drop.

“You have not heard of any negligence by Bayer,” Mark Ferguson, the company’s trial attorney, said today. “It was Bayer’s rice, it was released and other rice was contaminated. The question is, did Bayer act reasonably?” he said.

Louisiana Fields

The plaintiffs are several members of the Deshotels family and their rice fields in Louisiana. Danny Deshotels lives in Lettsworth, Louisiana, about 100 miles north of New Orleans and two miles west of the Mississippi River, Downing said.

Deshotels asked for about $1.5 million in damages for lost sales and contamination of his land, seed and equipment. The Deshotels family can’t seek punitive damages because the case was tried under Louisiana law, which doesn’t allow for such awards, plaintiffs’ lawyer Bruce Kingsdorf said in an interview today.

The jury of seven women began deliberating today.

Bayer’s LibertyLink brand of genetically altered rice was being studied at Louisiana State University in an effort to create a crop that could be safely sprayed with a weed-killer. In August 2006, the U.S. Agriculture Department announced that Bayer’s genetically modified seed had been found in commercially grown long-grain rice in Louisiana, Mississippi, Texas, Arkansas and Missouri.

Import Ban

Five days later, the European Union announced a ban on U.S. imports to the 27 countries in that group, Downing said at the start of the trial. Within four days of the announcement, a decline in rice futures had cost U.S. growers about $150 million, according to the farmers’ complaint in federal court in St. Louis.

Restrictions were eased after Bayer’s rice was declared safe by the Agriculture Department in November 2006. There are no claims in the rice litigation that LibertyLink harmed or risked human health. Farmers claim that the contamination cost them the European market for long-grain rice and that sales haven’t rebounded.

“Our rice exports to the EU fell off a cliff, almost literally, and you will see that they still haven’t recovered,” Downing said in opening statements at the trial June 21. Europeans “are still eating rice, but the customers we were selling to are now buying from these countries: Thailand, Pakistan, India and Uruguay.”

‘Short-Lived’

The farmers’ losses “were minimal and short-lived,” Ferguson, the Bayer lawyer, said today. “Global prices recovered quickly with the discovery of other markets.”

Farmers in five states began suing Bayer in federal court in 2006, asking to be allowed to pursue their claims in class action, or group suits, one action per state. U.S. District Judge Catherine Perry in St. Louis in August 2008 refused to allow the claims to be combined in class-action suits, instead setting bellwether, or test, trials on typical claims.

Bayer lost the first two trials in federal court, one for about $2 million in December and another in February for about $1.5 million. The federal juries didn’t award punitive damages.

Bayer also lost the first two trials in state court, both in Arkansas. The first of these trials ended in a jury verdict of about $1 million, including $500,000 in punitives. The second resulted in a verdict of almost $48 million, with $42 million in punitives, according to data compiled by Bloomberg.

Appellate Review

Bayer has filed post-trial motions to set aside the verdicts in federal court and “is seeking appellate review in the two state trials,” said Coffey, the company spokesman.

The case is In Re Genetically Modified Rice Litigation, 06- md-1811, U.S. District Court, Eastern District of Missouri (St. Louis).

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; Joe Whittington in federal court in St. Louis at joethewhitt@sbcglobal.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.