Summary Judgment Narrows Issues for First Syngenta Trial

A jury returned a verdict in favor of the Kansas class plaintiffs in the amount of $217.7 million on June 23, 2017. Read more here.

Note: The first bellwether trial in the Minnesota litigation was scheduled to begin April 24, 2017. It has been postponed to July 10.

Last week, Judge John Lungstrum, the federal district judge assigned to the nationwide Syngenta litigation, ruled on the parties’ first motions for summary judgment. These motions were restricted to cover only those claims scheduled for a bellwether trial on June 5, 2017. The order means that the first trial will be a bit simpler, as multiple claims and defenses were tossed out.

Background

As happens with all mass litigation, the Syngenta MDL class action has been slowly working its way through the system. While actions were first filed in the fall of 2014, a nationwide class and eight state classes of corn producers was not certified until last year. Those who fell within the definition of the class had until April 1, 2017, to opt out. If a producer who meets the court’s definition of a class member did not affirmatively opt out, he or she is automatically part of the class action. The court has determined that multiple bellwether or test trials will be held to help the parties gauge the strengths and weaknesses of the claims and determine whether they should settle.

The first trial is set to include only 9 plaintiffs, all of them representing the class of Kansas producers. The first of the two claims that was to be tried in the Kansas class trial was Count I of the nationwide class action, the count alleging that Syngenta violated the Lanham Act. The plaintiffs specifically alleged that Syngenta violated the Act by misleading producers regarding the timing of China’s approval of the Viptera[i] GMO trait. The entire case, of course, is grounded in the allegation that Syngenta injured the plaintiffs by marketing this trait before it was approved by China, ultimately causing China to reject all U.S. corn, causing the U.S. corn market to crumble, and causing the plaintiffs to receive less money for their corn.

The second claim to be tried in the first trial is Count XXII of the class action complaint, the claim alleging negligence under Kansas law. In other words, while the Lanham Act claim applied to all plaintiffs, the negligence claim to be tried in the first trial applies only to Kansas class members. The class complaint has multiple state-specific allegations that apply only to producers from particular states. The state law claims can be tried in federal court because they were supplemental to the federal Lanham Act claims, and because some class members are citizens of states different from those of the defendant.

The motions for summary judgment pending before Judge Lungstrum were restricted to the two Counts scheduled for resolution at the June 5, 2017, trial. They also addressed multiple defenses Syngenta had asserted in response to the claims.

In his April 5, 2017, order, Judge Lungstrum ruled in Syngenta’s favor as to all Lanham Act claims. The court also restricted the scope of the negligence claims the plaintiffs could seek to prove. The ruling, however, favored the plaintiffs with respect to a number of Syngenta’s defenses.

Lanham Act

The plaintiffs alleged in the class complaint that Syngenta had violated the Lanham Act by making "false or misleading representations in commercial advertising or promotion." After discovery, the only evidence the plaintiffs produced to support the claim for a violation of 15 U.S.C. § 1125(a)(1)(B) was a "Grower Letter" sent by a Syngenta employee in late August of 2011 to a number of producers stating that Syngenta expected Chinese import approval by March of 2012. In ruling in favor of Syngenta on its motion seeking summary judgment, the court agreed that the plaintiffs could not, as a matter of law, prove that this letter caused any of the plaintiffs’ alleged injuries. To prevail on a Lanham Act claim, a plaintiff must show that their injuries were caused by a defendant’s alleged misrepresentations. Here, the plaintiffs would have to be able to show that the farmers read and were influenced by the Grower Letter and that the the impact of the letter was great enough to cause the embargo that caused corn prices to drop. This, the court ruled, could not be shown. Of the 100 producers deposed in the class action, only one testified that he had even seen the Grower Letter. Noone testified that he purchased Viptera because of the letter. The plaintiffs were unable to submit any evidence to show that any of the plaintiffs’ injuries would not have occurred had the Grower Letter not been sent. Finally, the court noted that by the time the Grower Letter was sent in August of 2011, Syngenta had been selling Viptera for many months and planting for the 2011 season was complete.  The court ruled that Syngenta was thus entitled to summary judgment as to the plaintiffs’ Lanham Act claims.

Negligence

Count XXII of the master class complaint alleges that Syngenta was negligent in violation of Kansas law. This count applies only to Kansas producers and asserts a number of different negligence theories. Specifically, the plaintiffs allege that Syngenta breached its duty to the producers in the following ways:

• Prematurely commercializing Viptera on a widespread basis without reasonable or adequate safeguards
• Instituting a careless and ineffective “stewardship” program
• Failing to enforce or effectively monitor its stewardship program
• Selling Viptera to thousands of corn farmers with knowledge that they lacked the mechanisms, experience, ability and/or competence to effectively isolate or channel those products.
• Failing to adequately warn farmers as to the dangers of contamination by the GMO trait and to warn then of the potential that Viptera would lead to the loss of the Chinese market
• Distributing misleading information regarding the timing of China’s approval of Viptera.

Syngenta first asked the court to grant summary judgment in its favor with respect to all negligence claims based upon an allegation of misrepresentation. Syngenta argued that the plaintiffs had not properly pleaded negligent misrepresentation and that they could not avoid higher pleading standards imposed on such claims by asserting a claim of ordinary negligence based upon alleged misrepresentation.

The court agreed, granting Syngenta summary judgment with respect to any claims of negligence based in whole or in part on any alleged misrepresentation.

The court also granted summary judgment in Syngenta’s favor with respect to any theory of negligence based solely on a failure to warn. The court ruled, however, that any failure to warn could be considered part of the totality of Syngenta’s conduct that could establish a claim of negligence.  

Duty

The court next granted summary judgment for Syngenta with respect to plaintiffs' claim that, as an alternative basis for proving a duty owed by Syngenta, Syngenta owed a duty to them under the voluntary undertaking doctrine. This doctrine states that, even in the absence of a special relationship, the actor may still be liable to third persons when he negligently performs an undertaking to render services to another which he should recognize as necessary for the protection of third persons. The court ruled that this doctrine could not apply in this case because the plaintiffs are not seeking to recover damages for physical harm. The court ruled that the voluntary undertaking doctrine does not apply to claims seeking only economic injuries.

Likewise, the court entered summary judgment in favor of Syngenta by ruling that Syngenta did not have a duty to recall seeds they had already sold. The court denied summary judgment to Syngenta, however, as to its claim that it did not have a duty to conduct a limited launch of it GMO trait. The court found that a question of fact for the jury exists as to that question.

Finally, the court denied Syngenta’s motion for summary judgment as to punitive damages. The court disagreed that public policy or equitable defenses should preclude punitive damages, as a matter of law, at this stage of the litigation.

Syngenta’s Defenses

The court also granted summary judgment in the plaintiffs’ favor with respect to a number of defenses asserted by Syngenta. First, the court ruled that, as a matter of law, Syngenta could not show that the actions of two exporters, Cargill and ADM, were superseding causes of the plaintiffs’ damages. Syngenta could not show that other exporters would not have shipped the corn to China had Cargill and ADM bowed out. Consequently, the conduct of those exporters could not be a superseding cause. Similarly, the court ruled in favor of the plaintiffs with respect to Syngenta’s broad allegation that China’s actions in delaying approval and later rejecting U.S. corn were superseding causes of the plaintiffs’ harm. The alleged superseding acts of China related directly to Syngenta's alleged negligence. The court, however, denied summary judgment to the plaintiffs with respect to Syngenta’s allegation that China actually rejected the corn for reasons other than the presence of the GMO trait, such as for political reasons. A jury could find that China's rejection was, in fact, unrelated to Syngenta’s actions, and was, therefore, a superseding cause of the plaintiffs' harm. The court held that a jury could also find that China’s rejection of Viptera was not reasonably foreseeable to Syngenta.

The court also granted summary judgment to the plaintiffs with respect to Syngenta’s affirmative defenses of assumption of the risk, mitigation, antitrust preemption, and comparative fault.

What Does This Order Mean for the June 5 Trial?

The June 5, 2017, trial will focus solely on the Kansas class, the claims of negligence under Kansas law on behalf of Kansas producers. Did Syngenta owe a duty to the plaintiffs? Did Syngenta breach that duty by unreasonably marketing Viptera prematurely or by failing to implement a reasonable stewardship program? Did any breach of a duty owed by Syngenta to the plaintiffs cause China to reject U.S. corn, thereby causing U.S. corn prices to plummet, and the plaintiffs to receive less money for the corn they grew? Any plaintiffs’ verdict would require the jury to find in favor of the plaintiffs as to all of those questions. The court also leaves open the door for Syngenta to prove that China wrongfully rejected shipments of corn for reasons other than the presence of the Viptera trait. If such proof is established, China’s actions would be a superseding cause for the plaintiffs’ damages, and the plaintiffs would not prevail in their action against Syngenta.

The June 5 Kansas class trial is scheduled to last for 20 days. It will be a very important milestone in this massive litigation.

We’ll keep you posted!