According to the December 8th law360.com article, “Bayer Told To Cough Up $48M In Rice Contamination Suit”, the Arkansas Supreme Court this week upheld a $47.9 million verdict against Bayer AG and its affiliates in a suit brought by rice farmers who claimed they had sustained large financial losses following the contamination of their crops, via Bayer’s genetically modified rice. The verdict that the state’s $1 million punitive damages cap was unconstitutional was also upheld.
Over 10,000 rice farmers have filed Bayer and its CropScience unit with lawsuits over the contamination. They say this hindered rice exports to the European Union, Mexico, Russia and other countries averse to importing genetically engineered crops.
In July, Bayer announced in would pay $750 million to settle a multidistrict litigation in Missouri and other long-running suits over tainted rice crops in state and federal courts. The farmers in the Arkansas suit were not included in that settlement.
The Arkansas Supreme Court shot down Bayer’s attempt to undo a Lonoke County jury’s award of nearly $6 million in compensatory damages and $42 million in punitive damage to rice farmers. It also knocked off the state’s $1 million cap on punitive damages, which applied to all cases except for those in which the purpose of the defendant’s conduct was to harm the plaintiff.
Scott Powell, a Hare Wynn Newell & Newton LLP attorney representing the farmers, was quoted as saying: “It is a wonderful victory for our clients who have struggled mightily over the loss of the world rice markets and continue to struggle. They are very deserving of this victory, and I could not be more proud of and for them.”
Bayer CropScience was quoted as having said in a statement: “At this time, we are studying the court’s opinion and considering our options.”
Bayer claimed that the rice farmers had not provided enough evidence to show the company had behaved with malice or reckless disregard and as a result, owed punitive damages. The court rejected this claim.
In its challenge of the lower court result, Bayer also contended that the $42 million punitive damages award should be reduced, or that the company should be granted a new trial because the verdict was “grossly excessive” under both Arkansas law and the U.S. Constitution.
Although Bayer put forth that it had taken steps to guard against the risk of contamination by establishing a stewardship program to achieve compliance with federal regulations and contractually requiring those handling the genetically engineered rice to comply with containment measures, the court was more focused on the critical injury that had occurred, and that the injury had occurred because Bayer continued its conduct in spite of knowing it would naturally result in injury.
Per the article, the court was quoted as having said: “The fact that Bayer employed some measures to prevent the release of [genetically modified rice], standing alone and without regard to other facts and attending circumstances, does not absolve it of liability for punitive damages.”