This post should not be construed as legal advice. This post originally appeared in Lancaster Farming on Jan. 2, 2016 (Southern Edition, Vol. 61, No. 13). A variation of this post also appeared in the Delmarva Farmer on Dec. 20th.
Happy New Year, to everyone reading this. Recently, many of you have begun to receive letters involving a class action lawsuit involving Syngenta. The lawsuits stem from Syngenta’s Agrisure Viptera® which contains the MR162 genetic trait aimed at the control of armyworms.
A little background before we look at the issues. Syngenta began selling the seeds in 2011 after gaining U.S. approval in 2010 and approval from key trading partners, which did not include China. Industry standards at the time only required approval by key trading partners before Syngenta could sell the seed. At the time, MIR162 was approved in the United States and by key trading partners, China was not yet a key trading partner in corn. In 2013, China found traces of MIR162 in corn imports from the United States and began to reject any corn shipment with a trace of MIR162. China eventually approved the seeds in December of 2014.
Over this same period, corn prices (as well as other commodity prices) have fallen from highs experienced in mid-2012. This decline can potentially be traced from lower yields due to a drought in 2012 to record yields in 2013 and 2014, but many have argued the decline is due to China’s rejection of U.S. corn shipments because of contamination by the MIR162 genes. U.S. corn imports to China did drop by 85 percent since the discovery of MIR162 traces in November 2013.
MIR162 has led to a host of lawsuits from U.S. farmers, Cargill, and Syngenta itself. Today we will focus mainly on the claims from the lawsuits filed by U.S. farmers since that is what you are getting letters on now. Starting in September 2014, U.S. farmers began to file lawsuits seeking a class action lawsuit against Syngenta for the disruption to the U.S. corn market caused by the release of MIR162. The claims brought in the class action lawsuits are on a variety of legal issues. Class members claim that Syngenta violated the Lanham Act (Federal law), violated state laws related to false or misleading statements about a product, and is the cause of negligence claims, trespass to chattels claims, nuisance claims, and violations of state consumer protection laws.
So where are we at today in this ongoing litigation? On December 11, 2014, the U.S. Judicial Panel on Multidistrict Litigation (JPML) ruled and consolidated the 1,300 plus lawsuits in one Federal district court. The JPML is a special body within the Federal court system that manages multidistrict litigation. JPML decides when pending Federal civil lawsuits in two or more Federal districts should be transferred to one Federal district court. This is usually done when the civil lawsuits involve common questions of fact. In this case, the JPML ruled that all pending litigation should be transferred to the Federal district court in Kansas.
Earlier in December, 2015, Syngenta brought a third-party complaint against Cargill and Archer Daniels Midland (ADM). The gest of Syngenta’s complaint is that if Syngenta is ultimately found liable for damages in the class action lawsuit, then Cargill and ADM should pay the damages. Syngenta’s theory is Syngenta sells seeds but does not market harvested grain. Cargill and ADM both knew the corn was unapproved in China but did nothing to segregate that grain from other corn approved in China. Both companies, according to Syngenta, were in a better position to prevent the grain from entering the Chinese market before approved. As of writing this, Cargill and ADM have not responded to this complaint.
This class action represents a first of its kind in regards to biotechnology and agriculture. Previous class actions involving biotech seeds involved one not approved for human consumption that entered the food supply (StarLink corn) and one not approved in the United States (LLRice601). Both cases resulted in the developer settling with U.S. farmers impacted. The current Syngenta class action litigation involves a biotech seed approved in the U.S. (what U.S. law requires) and approved by major trading partners (what industry standards require).
This lawsuit could have larger ramifications for new seeds developed. If the plaintiffs (i.e. all the farmers that sign on as class members) are successful, then seed developers may be forced to keep new varieties off the market until approved by more than just the U.S. and key trading partners. In this case, Chinese law mandates they make a decision in 270 days, but it took over 1,700 days for the Chinese government to approve.