Bayer Welcomes Supreme Court’s Roundup Move

On Monday, the court asked U.S. Solicitor General Elizabeth Prelogar for the administration’s views on whether it should hear Bayer’s appeal. Analysts and Bayer executives have previously said that chances were low that the court would take up the case. Some investors cautioned that the court could still deny Bayer’s petition for review later or ultimately rule against the company. It will likely take the solicitor general several months to respond.

In a bid to end thousands of Roundup claims, Bayer in August filed a petition to invalidate a $25 million jury verdict in the case of a California resident, Edwin Hardeman, who blamed the herbicide for causing his cancer.

The company has been battling Roundup lawsuits since taking over Monsanto, the product’s original owner, in 2018. The uncertainty over the liability, mounting legal costs, and some failed attempts to settle past and future cases have weighed on Bayer’s share price and angered investors. Bayer says that the chemical is safe and continues to sell Roundup with glyphosate, the weedkiller’s active ingredient, which some plaintiffs have said causes their cancer. Federal regulators have said that glyphosate is safe and not carcinogenic.

“This is an encouraging step,” Mr. Baumann said. “The U.S. Supreme Court showed interest in our Hardeman case.”

Some investors agree the court’s move was positive as it signaled preliminary interest in the case. The Supreme Court only hears about 70 cases each term, a small percentage of the thousands of cases it is asked to review.

“It’s a small step in the right direction,” said Markus Manns, fund manager at German asset manager Union Investment, which owns Bayer shares. But, he said, the move also means that investors won’t know for months “whether Bayer ultimately wins or loses the whole case.”

Bayer recently notched two victories in Roundup cases following a string of losses. Last week, a jury in California rejected a woman’s claim that the product had caused her cancer. In October, a jury found that the company wasn’t liable for a child’s cancer.

Previously, three U.S. juries have found in favor of plaintiffs who said that glyphosate caused their cancer, awarding them hundreds of millions of dollars in damages.

The Supreme Court petition is one of the pillars of a five-point plan Bayer announced earlier this year to deal with the Roundup litigation, including beginning to remove glyphosate from Roundup that is sold to American residential consumers from 2023 as most of the claims come from such users. Roundup sold to commercial users, which makes the bulk of the sales, will still include glyphosate. Bayer also plans to create a new website with studies relevant to Roundup’s safety.

Mr. Baumann said that following the Supreme Court move this week, the company was moving ahead with its strategy.

“We’re continuing to execute our five-point plan and submitting the Hardeman case to the Supreme Court is one of them,” he said.

Bayer, the inventor of aspirin, made a big bet on agriculture with its $63 billion acquisition of Monsanto. The move was supposed to help the German company tap into rising demand driven by rapid population growth. Instead, it exposed Bayer to open-ended legal litigation over Monsanto’s Roundup herbicide and glyphosate.

Bayer’s share price is down more than 50% since the Monsanto acquisition closed in June 2018. Bayer says it has settled around 98,000 of a total of 125,000 cases. However, repeated efforts by the company to engineer a settlement that would also cover potential future cases have so far failed.

The move to ask the Supreme Court for a review of the Hardeman case carries high stakes for the company. Bayer has earmarked more than $16 billion in total for Roundup litigation issues.

“There is now this overhang of future lawsuits and you never know exactly how much damages will have to be paid in the next few years,” Mr. Manns said. “All that could all be eliminated in one fell swoop” if the court rules in Bayer’s favor.

However, “if the ultimate decision is negative, then the status quo is maintained and the uncertainty continues,” Mr. Manns said.

At the Supreme Court, Bayer argues that the verdict in the Hardeman case is invalid because state-law claims are preempted by federal law. The federal Environmental Protection Agency has said that Roundup isn’t a public-health risk.

The high court with some regularity asks the U.S. solicitor general to weigh in on appeals that raise issues in which the federal government may have an interest. The court often, but not always, follows the solicitor general’s recommendation on whether or not to hear a case.

—Brent Kendall in Washington contributed to this article.

Write to Georgi Kantchev at [email protected]