Bayer Reaches Settlement Over Seattle-Area School PCB Cases (3)

Bayer AG agreed to settle cases related to a Seattle-area school where more than 200 people were exposed to toxic chemicals made by the company’s Monsanto unit.

Bayer didn’t disclose the financial terms of the accord, but said the cost was covered by a $618.3 million provision taken this month to deal with the company’s liabilities for polychlorinated biphenyls, or PCBs, once manufactured by Monsanto. The company’s shares rose 2.3% in Germany.

Ex-students and teachers at the Sky Valley School outside Seattle sued Bayer and Monsanto over injuries tied to PCBs contained in aging fluorescent-light fixtures. The deal announced by Bayer — already enmeshed in multiyear litigation over its herbicide Roundup — is seen as a positive development in its handling of a wave of PCB lawsuits over Monsanto building materials made half a century ago.

“This development suggests progress toward containing PCB liabilities and reducing the risk of swelling,” analysts at Jefferies wrote in a note.

Bayer, which acquired Monsanto in 2018 for $63 billion, already has agreed to pay almost $2 billion in settlements in PCB cases brought by states, cities and counties. Separate litigation over Monsanto’s Roundup weedkiller has created a drag on the German conglomerate’s shares.

The company has reserved more than $17 billion for US Roundup suits. Monsanto stopped using PCBs in its products in 1977.

Analysts have cast a wary eye on Bayer’s burgeoning PCB problem. Bloomberg Intelligence analyst Holly Froum has projected it may cost Monsanto and two other companies embroiled in PCBs litigation — Eastman Chemical’s Solutia and Pfizer’s Pharmacia — as much as $3.9 billion to settle the remaining cases.

The settlement announced Monday covers more than 200 plaintiffs with ties to the Sky Valley School, Bayer said. It doesn’t wipe out the 10 verdicts in which juries in Washington State already have awarded a total of more than $1 billion, the company said. Those awards are under appeal.

Bayer is asking the Washington Supreme Court to throw out the PCB verdicts based on its legal defenses. The court heard arguments in February, but has yet to hand down a ruling. An intermediate appellate court’s backing of Bayer’s position on the PCB cases prompted the review by the state’s highest court.

“While the company remains confident in its legal strategy and defenses, and is fully prepared to defend cases at trial, it has maintained it will consider resolving cases on appropriate terms when it is strategically advantageous to help mitigate the risks and uncertainties of this litigation,” Bayer officials said in a release.

Washington Verdict

Earlier this year, state-court jurors in Washington ordered Bayer to pay $100 million to students and teachers exposed to PCBs, which were used used in electrical transformers, paints and sealants for their fire-resistant properties. The compounds were banned in the US in 1979 after researchers found they posed a cancer risk.

The company still faces dozens of PCB suits by school districts, states and cities over health exposure and environmental contamination in buildings, landfills and waterways, according to Bayer’s 2023 annual report.

Bayer hopes to recover some of its PCBs litigation costs from companies such as General Electric and Westinghouse Electric, now Paramount Global, that were large users of Monsanto PCB products. Bayer hired a prominent plaintiffs’ lawyer to try to enforce 52-year-old indemnity contracts the company says require its corporate customers to indemnify Monsanto for payouts tied to PCB pollution.

The case before the Washington Supreme Court is Erickson v. Pharmacia LLC, No. 103135-1, Washington Supreme Court (Olympia)

(Updates with indemnity litigation in 13th paragraph. A previous version of the story was corrected to fix the amount in the second paragraph.)

--With assistance from Sonja Wind.

To contact the reporters on this story:
Marthe Fourcade in Paris at mfourcade@bloomberg.net;
Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editors responsible for this story:
Eric Pfanner at epfanner1@bloomberg.net

Anthony Aarons

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