Everyone interested in the farmer lawsuits against Syngenta knows about reports of a settlement between the disputing parties, achieved in the midst of a jury trial. But the settling parties aren’t saying what the details of the settlement might be. Following is an effort to gather some available information and hypothesize there from what the settlement might mean for individual farmers.
Prior Jury Verdict
On June 23, 2017, at the end of a three week trial, a jury in the United States District Court for the District of Kansas issued a verdict in favor of a class of Kansas farmers against Syngenta. The jury’s Verdict Form includes the following questions and answers:
Question No. 1: “Did Class Plaintiffs prove, by a preponderance of the evidence, the requirements of negligence, as set forth in Instructions No. 13-15?
Jury’s Answer to Question No. 1: “Yes.”
Question No. 2: “Did Syngenta prove, by a preponderance of the evidence, its defense of a superseding cause, as set forth in Instruction No. 16?
Jury’s Answer to Question No. 2: “No.”
Question No. 3: “State the amount of damages that Class Plaintiffs proved, by a preponderance of the evidence, as set forth in Instruction No. 18.”
Jury’s Answer to Question No. 3: “$217,700,000.”
Earlier related article: Syngental Corn Traits Settlement Rumored at $1.5Bln – DTN
Since June 23, 2017, the parties in the Kansas lawsuit have been wrangling over post-trial matters, such as requests by both parties for a Court-approved plan for allocating the $217.7 million verdict amount and for scheduling additional bellwether trials for other state classes. Syngenta has expressed its intention to appeal the jury verdict, but the deadline for doing so has not yet arrived.
Second Jury Trial
Meanwhile, another bellwether trial began on September 11, 2017, in the District Court for Hennepin County, Minnesota, for a related group of farmers against Syngenta. Trial continued through the first full week and through Wednesday of the second week. Then, in a harbinger of the settlement to come, trial recessed for Thursday and Friday of that week.
Reports of Settlement
The following Monday, September 26, news reports started circulating on a settlement of all claims of all U.S. farmers against Syngenta for a total amount between $1.4 and $1.5 billion. Nearly all U.S. corn farmers are, apparently, included in the settlement. It doesn’t make any difference whether the farmer has hired an attorney, is involved in a lawsuit, or has taken any action whatsoever. Put another way, the settlement appears to mean this:
- Every U.S. farmer (with limited exceptions) who priced corn for sale after November 18, 2013, will be entitled to make a claim against and receive a distribution from the settlement funds.
- What the limitations might be are currently unknown. For example, farmers who planted Duracade or Viptera seed are excluded from the Kansas class designations; but whether they are also excluded from the settlement remains to be seen.
- What are the financial details of such a settlement? And how much money will the settlement provide to each farmer on a “cents per bushel” basis?
- The answer to such questions is, currently, this: The public does not know, and we won’t know for sure until the parties file signed documents requesting court approval of the settlement.
- As to timing, Syngenta says the signed settlement documents will be filed “later this year.”
So, we are all left to speculate on what such a settlement might mean.
Speculation is always a hazardous thing. But I’m going to make an attempt, here, to pull some damages information from two expert witnesses in the Kansas trial and extrapolate from there on what the $1.4 to $1.5 settlement amount might mean. By way of emphasis, the following is, at best, an educated guess [hopefully, no one will contest the “educated” part too vigorously] on what the settlement might mean for each farmer.
Expert Witness Information on Damages
Plaintiffs in the Kansas lawsuit presented evidence on damages from two experts. One expert is Bruce A. Babcock, a Professor in the Department of Economics at Iowa State University. The other is Colin A. Carter, a Professor of Agricultural and Resource Economics at University of California, Davis. These two experts identify “cents per bushel market losses” and total market losses as follows:
From Babcock From Carter
(Marketing Year – “cents per bushel market losses”)
2013/14 11.5¢ 14.84¢
2014/15 12.7¢ 13.00¢
2015/16 7.2¢ 8.58¢
2016/17 4.7¢ 6.83¢
2017/18 4.8¢ 5.44¢
Kansas Class Total Losses $235 million $192 million
National Class Total Losses $3.95 billion $4.679 billion
Such numbers from the two professors are different, but-similar. And the $217.7 million verdict for the Kansas Class is between the $235 million damages number from Prof. Babcock and the $192 million damages number from Prof. Carter.
An Allocation Order
On September 13, 2017, the Judge, in the Kansas lawsuit entered an “Order” for developing a “Plan of Allocation of Judgment Funds.” The order provides:
“If the jury’s verdict and damages award are upheld after any appeals,” then details will be developed for “the allocation” of judgment funds for distribution to Kansas farmers.
The Order references expert testimony on damages and adds:
“The starting point for calculations” is “the number of bushels of corn impacted in each relevant period that are attributed to each Class Member.” “Those figures . . . shall be multiplied by a per-bushel damages figure for each marketing year of the class period.”
Accordingly, it seems that settlement negotiations would utilize, as a starting point, the information provided by Professors Babcock and Carter and provisions of the allocation Order.
The settlement amount [let’s call it $1.45 billion] is 36.71% of Prof. Babcock’s national class number and 30.99% of Prof. Carter’s national class number. For any particular farmer trying to evaluate his/her/its potential recovery from this settlement, here is a way to start setting expectations on what the settlement might mean:
for Prof. Babcock, the annual “cents per bushel” loss ranges from 11.5¢ down to 4.8¢, for an average of 8.18¢ per bushel; and
for Prof. Carter, the annual “cents per bushel” loss ranges from 14.84¢ down to 5.44¢, for an average of 9.74¢ per bushel.
Once a farmer multiplies his/her/its total bushels by the appropriate “cents per bushel” loss number(s), deductions need to be made from there. Two primary deductions are likely to be as follows:
Settlement discount. If the settlement amount is discounted to 36.71% and 30.99% of the professors’ total national numbers, then a farmer’s total bushels multiplied by the appropriate “cents per bushel” loss number(s) must be discounted in the same way.
Attorney fees. There are two types of attorney fees that might be applicable: (i) fees of attorneys for the claimants in the Kansas, Minnesota and related lawsuits, and (ii) fees of attorneys who help a particular farmer gather information and present his/her/its claim against the settlement fund. As a broad rule of thumb, this amount might be viewed as one-third of the total damages amount the farmer is entitled to recover from the settlement fund.
Hypothetical Calculations of a Net Recovery
For illustration purposes, here’s how a hypothetical calculation of a “cents per bushel” net recovery might work, using the experts’ average “cents per bushel” loss numbers as an example:
Using Babcock’s Numbers Using Carter’s Numbers
Average “cents per bushel” loss 8.18¢ 9.74¢
Apply settlement discount x .3671 x .3099
Result 3.003¢ 3.018¢
Less one-third attorney fees -1.001¢ -1.006¢
Hypothetical “cents per bushel” 2.002¢ 2.012¢
Hypothetical Net Recovery $100.10 $100.60
(on 1,000 bushels in each of the five years (5,000 bu. x 2.001/2.012 cents per bushel)
Future Action by Farmers to Present Claims
As to future action by each farmer to present his/her/its claim for a distribution from the settlement money, the process will, presumably, work something like this:
Once settlement documents are finalized, signed, filed and approved by all the courts involved, then farmers will be notified and will need to present their claims in writing to receive settlement funds; and
Procedures for doing so will be established, and notice of such procedures will be provided to farmers.
Hopefully, (i) the foregoing assumptions and speculations provide some general help for those looking for preliminary information on what the settlement might mean, and (ii) others will provide additional information to create a better understanding of what is happening. And, presumably, light will be shed in the months ahead on the actual details of the settlement and what it truly means.
The author, Donald L. Swanson, is a shareholder in the Koley Jessen P.C., L.L.O., law firm of Omaha, Nebraska. His online bio is here.