Most Syngenta Claims Survive Motion to Dismiss...What’s Next?

 

We last updated you on the status of the Syngenta litigation in April. This month we’ll update you on several key developments that have occurred since April, primarily this month’s ruling on Syngenta’s motion to dismiss. We’ll also provide a brief roadmap as to possible next steps in this complex legal battle.

Background

As discussed more thoroughly in past articles, Syngenta is facing legal complaints from thousands of plaintiffs across the country regarding its alleged premature commercialization of a genetically-modified (GM) corn trait. Although the product had been approved for sale in the United States and many other countries, it had not been approved for import into China at the time it was offered for sale in the U.S. In November of 2013, China rejected the import of all U.S. corn, asserting that it was tainted with traces of the unapproved trait. The average price of corn per bushel dropped by more than half between the summer of 2012 and the fall of 2014. A number of corn exporters, handlers, grain elevators, and farmers alleged that the drop in price was largely due to China’s rejection of U.S. corn. They asserted that Syngenta wrongly marketed the product before China had agreed to accept it. They began filing lawsuits in 2014, and the lawsuits continue in 2015. Although the lawsuits assert many different federal and state law claims, most allege that Syngenta:

(1) violated the Lanham Act by misleading its stakeholders, the public, and government regulators about the status of its GM corn and its actions in releasing it to the market, and

(2) breached its duty of care to the plaintiffs by prematurely commercializing the GM corn trait without reasonable safeguards and by instituting a careless and ineffective “stewardship” program which ensured contamination of the U.S. corn supply.

In December 2014, most of the lawsuits (even many of those filed in state courts) were consolidated into multi-district litigation (MDL) in the United States District Court for the District of Kansas. Two “master” class action complaints remain pending in the MDL: One proposes to represent a class of corn farmers who did not plant Viptera or Duracade (the Syngenta GM corn at issue), and the other seeks to represent corn exporters, handlers, and grain elevators. Thousands of individual lawsuits against Syngenta also remain pending in the MDL.

Motions to Remand

In May, the court ruled that lawsuits filed by Cargill and ADM should be remanded to state court. The complaints were filed in state court, did not involve diversity jurisdiction, and did not include any federal claims. Nonetheless, Syngenta had argued that the doctrine of the federal common law of foreign relations gave the federal court jurisdiction over the actions. Specifically, Syngenta argued that the impropriety of China’s action in rejecting the corn—which would be an issue in the plaintiffs’ negligence claims—created a federal question.  In its May ruling, the court disagreed, finding that the lawfulness of China’s actions was not a substantial question and that any consideration of that lawfulness would be a fact-specific question, not giving rise to federal question jurisdiction. In addition to remanding the cases filed by Cargill and ADM to state court, the court also remanded to state courts more than one thousand cases that did not have an independent basis for federal court jurisdiction. Many state court actions are pending in Minnesota.

Motions to Dismiss

In June, Syngenta filed motions to dismiss the complaints filed by corn producers, non-producers, and milo producers. Syngenta argued that the plaintiffs had failed to state a claim for which relief could be granted on many different fronts. Two main arguments were that (1) Syngenta did not owe a legal duty to the plaintiffs as a matter of law, and (2) the plaintiffs’ claims for economic damages for negligence or private nuisance were barred by the economic loss doctrine. The court rejected these assertions, finding first that the plaintiffs had not established an exception to the general rule that a party has a duty to exercise reasonable care not to create an unreasonable risk of harm to others. The court also held that neither the economic loss doctrine nor the "stranger" economic loss doctrine barred the plaintiffs’ claims. As such, the court denied the motion to dismiss on those grounds. The court did dismiss several claims, granting the plaintiffs the right to amend through October 4. Dismissed claims included:

  • Those based on an alleged failure to warn to the extent based on a lack of warnings in materials accompanying the products
  • Trespass to chattels claims (except those filed in Louisiana)
  • The corn producers’ claims for private nuisance (with leave granted to amend to allege facts to show that particular plaintiffs’ land suffered contamination and that Syngenta exercised continuing control over its products post-sale)
  • Lanham Act claims to the extent based on representations in the deregulation petition, earnings conference call, and request form (with leave granted to amend to allege facts to show that the representations constituted commercial advertising or promotion)
  • Plaintiffs’ claims under the Minnesota consumer protection statutes (with leave granted to amend to allege claims on behalf of Minnesota residents under the MUTPA provision allowing for a private right of action)

The motions to dismiss were complicated by the fact that most of the plaintiffs’ claims are state law claims. The court thus had to look at the laws of many different states when determining the validity of the claims asserted. It should be remembered that a motion to dismiss is a very difficult motion to win. Only in rare circumstances is such a motion granted. To survive a motion to dismiss, a plaintiff need not establish its likelihood of success. Rather, the court must assume that all facts alleged in the plaintiff’s complaint are true, even if doubtful. In that light, if the plaintiff has set forth any legal claim that is “plausible on its face,” the court cannot dismiss the action.  Consequently, the court’s ruling on the motions to dismiss was not a landmark ruling, but merely another necessary step in this complex matter.

Class Certification Question

What will be of much greater significance will be the court’s decision on whether to certify one or more proposed classes of plaintiffs.  If such classes are certified, the rights of all similarly situated persons or businesses would be litigated in the class actions, unless those similarly situated parties affirmatively choose to “opt out.” For example, the legal rights of most corn farmers who did not plant Viptera or Duracade could be automatically adjudicated in the producer class action if class certification is granted. If the class were to settle its claims with Syngenta, “absent class members” (those not named in the suit but meeting the definition of members) would share in the proceeds. The proceeds would be distributed first to the attorneys, with the remainder divided amongst class members according to a formula determined by the parties and the court. 

As of this writing, no schedule has been set for deciding the question of class certification. Discovery continues by the named plaintiffs and Syngenta.

Plaintiff Recruitment Continues

Also continuing are additional lawsuits. Many law firms continue to recruit clients to file individual lawsuits against Syngenta. These attorneys assert that producers are more likely to acquire higher damages if they have their own representation. They also point out that if a class is not certified, every producer will have to file his or her own lawsuit to proceed. They contend that the statute of limitations could run on those lawsuits before they are filed if the producers do not act to file now. And that assertion could be true. State law governs the statutes of limitations for most of these claims, and the lengths will vary depending upon the claims and the states. Although a United States Supreme Court decision[i] has established that the statute of limitations is tolled in some federal actions during the pendency of a class action determination, it is not clear whether that doctrine would apply to the claims asserted in these actions. It is also true that the MDL putative class actions do not include producers who actually planted Viptera or Duracade. To preserve their right to file claims, producers who actually planted corn with the GM trait would have to file their own actions.

Some plaintiffs’ attorneys are comparing the Syngenta case to previous GM negligence cases[ii] that resulted in large settlements.   These past cases, however, are highly distinguishable because those products at issue had not been approved for human consumption in the United States, yet trace amounts were found in the U.S. food supply. These were classic cases of accidental or negligent GM contamination. In the Syngenta matter, the GM trait was approved in the United States and other countries. The allegation is that Syngenta should have waited until China approved the trait before releasing it into the United States market. This is a wholly different argument with wholly different legal, industry, and trade implications.

Conclusion

With the initial motions to dismiss decided, it is likely that the next major hurdle in this litigation will be the question of class certification. There will likely also be motions for summary judgment on the future docket. Unlike a motion to dismiss, a motion for summary judgment requires the parties to come forward with actual evidence supporting their claims.

In the meantime, discovery will continue, as will plaintiff recruitment. As always, we will keep you posted.

 

 

[i] American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974).

[ii]   In re StarLink Corn Prods. Liability Litigation, 212 F. Supp. 2d 828 (N.D. Ill. 2002); In re Genetically Modified Rice Litigation, 666 F. Supp. 2d 1004 (E.D. Mo. 2009).

CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

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