|Exchange||Frankfurt Stock Exchange|
|Claims||Inadequate Disclosures Regarding Acquisition|
|Relevant Period||September 14, 2016 - March 21, 2019|
|Participation Deadline||October 1, 2021 (soft)|
On June 7, 2018, Bayer AG completed its $62 billion acquisition of Monsanto Corp., a U.S. agrochemical company. Plaintiffs allege that between 2016 and 2019, in violation of German securities laws, Bayer failed to disclose the massive liabilities Monsanto faced from personal injury suits related to its herbicide Roundup: 8,700 at the time of merger and more than 100,000 today. Bayer’s stock price fell significantly after three high profile multi-million-dollar verdicts against it. While the judges significantly reduced the amounts awarded, they did not change the verdicts finding Monsanto liable and concluding Roundup caused the plaintiffs’ cancers. On June 24, 2020, Bayer agreed to pay up to $10.9 billion to resolve an estimated 95,000 cases, including $1.25 billion earmarked for future claims. However, the settlement is subject to court approval and the sitting judge has criticized the plan, and it does not include 30,000 U.S. claims or suits filed in other countries.
Investors Should Consider Both Country and Case-Specific Risks
The Bayer recovery efforts show that even in the same country, participant risks and burdens can vary depending on the organizer’s proposed recovery strategy. Savvy investors should adjust their loss thresholds up or down depending on case-specific factors, including legal strategies. This matter also shows that differing views by organizers on legal issues like statute of limitations can impact the analysis.
Litigation strategies impact case risks and participation burdens
Germany is considered a medium-risk jurisdiction. Cases proceed via KapMuG, a legal process by which issues common to claimant groups get resolved by model cases. Decisions in the model cases are binding on other litigants in the KapMug. After those proceedings end, the court adjudicates individual questions including loss causation and damages.
Many investors don’t realize that Germany also has a claims preservation process by which they can administratively register claims with the court rather than filing suit. The six-month window for registering claims starts after the court selects the model case. Registrants are not parties to litigation. They essentially sit on the sidelines during KapMug proceedings and can decide later whether to sue depending on how things go. If well, they can join the KapMug by filing suit. If poorly, they can withdraw their registrations or just let claims expire.
Here, one organizer proposes group litigation against Bayer, i.e. joining the KapMug now. The other is proposing claim preservation, i.e. registering claims with the court and postponing suit.
Registration reduces participation risks and justifies a lower loss threshold. Since they aren’t suing, registrants do not face risk of adverse cost awards. They can withdraw their claims without the defendants’ consent, and the defendants tend to focus less on registrant claims, prioritizing those of active litigants.
Differing views on limitations strategies drive organizer choice
Here’s the rub. Claimants must register claims before they legally expire and the organizers have different opinions on when that occurs. The organizer proposing group litigation believes they expire on December 31, 2021, three years after the DeWayne Johnson verdict, the first major Roundup case. The organizer proposing claim registration believes they expire on December 31, 2022, three years from the Edwin Hardeman verdict, a “bellwether” case intended to give parties of pending lawsuits an indication of the direction courts were moving in these cases.
The registration period starts when the Court appoints the model plaintiff and case. It is already August and this has not yet happened. If the statute of limitations ends on December 31, 2021, it’s possible that the registration period will not start until after the claims expired, making it useless. If registration opens before year end, the effective window will be less than six months. By contrast, if claims expire at the end of 2022, there is plenty of time for appointment of a model plaintiff and to register claims. In short, while claim preservation reduces participation risks, that strategy is riskier here due to uncertainty around when registration opens and when claims expire, which may force investors into suing now.
But the general point remains. Loss thresholds don’t just turn on jurisdiction risk. They must also reflect things specific to cases that may impact recovery prospects and participation burdens including the specific litigation strategies chosen by the organizers.
Determining Eligibility & Costs:
Investors are eligible to participate if they acquired Bayer shares during the Relevant Period. Both organizers will represent you on a no-win, no-fee basis, advancing all expenses. If successful, they will receive cost reimbursement plus a success fee from the recovery. The organizers will contractually indemnify claimants against the risk of adverse cost (loser pays) awards by the courts and post any bonds or other surety required by the courts.
If you have compensable losses and wish to register with the organizers, you must submit a signed funding or retainer agreement, a power of attorney, and other supporting documents. FRT will provide these upon request.
To learn more about how FRT can help your firm identify and monitor antitrust litigation opportunities, visit our website.
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