Monsanto MON -3.13% today said it believes the outbreak of genetically modified wheat on a farm in Oregon was likely an “isolated incident” that can’t be explained by either stray seed or pollen flowing into the field.
Monsanto’s statements come a day after the company was hit with the first of will probably be multiple lawsuits accusing the company of negligence that helped trigger turmoil in global wheat markets. The lawsuit on behalf of a Kansas wheat farmer says Monsanto tested the wheat varieties engineered to be resistant to Roundup weed-killer when it “knew there was a high risk that the genetically modified wheat could contaminate other varieties of wheat” on nearby farms.
The lawsuit led by Houston’s Susman Godfrey is on its surface a simple negligence case, no different than a slip-and-fall lawsuit other than the number of zeroes behind it. If Monsanto is found liable for allowing its genetically modified seed to stray, it theoretically could be on the hook for billions of dollars in damages due to depressed wheat prices and even farmland values.
“We fully expect we will see future episodes in other parts of the country,” said Warren Burns, a partner with Susman Godfrey in Dallas, since Monsanto tested the wheat in 16 states from 1998 to 2005 . “The potential here is this is the tip of the iceberg.”
Burns said his model is the lawsuit rice farmers brought against Bayer Bayer CropScience after genetically modified rice not intended for human consumption polluted rice crops. Bayer paid $750 million to settle that case in 2011. Farmers also settled a lawsuit over StarLink corn in 2004. Susman’s partners in the Monsanto case include the Murray Law Firm in New Orleans and Goldman Phipps of San Antonio, who led the Bayer CropSciences case.
The latest suit might be hurt a bit by the fact that September wheat futures, according to the CME, are actually up since the U.S. Agriculture Dept. confirmed the Roundup-ready wheat on May 29. But Japan placed a ban on U.S. wheat imports since the discovery and the EU, which also bans genetically modified wheat, said it will test all imports and block any found with the Monsanto genes.
Monsanto’s statements appear carefully designed to counter any legal arguments the plaintiffs may bring. For example, the company opens by saying its “process for closing out the original Roundup Ready wheat program was rigorous, well-documented and audited,” and conducted under government protocols. This is designed to refute claims that it took unreasonable risks of its seed contaminating other wheat crops.
The company also says it doesn’t think the Oregon plants got there through a stray release of seed, or pollen flowing through the air, and the company hadn’t tested the modified wheat in Oregon in the previous 10 years. It also announced what it called a highly accurate genetic test to detect the errant gene should it turn up in the nation’s wheat crop.
Finally, the company argues there’s nothing wrong with its modified wheat, anyway. The Food and Drug Administration declared it safe in 2004, and farmers export Roundup Ready soybeans and corn around the world. Monsanto shelved the wheat program in 2004 after farmers resisted the product, partly out of fears it would be banned in export markets.
Plaintiffs will try to convince courts to subject Monsanto to strict liability, treating the genetically modified wheat like other inherently dangerous products like pharmaceuticals or explosives. In that scenario, companies have a much harder time defending themselves against claims their products caused harm.
Monsanto dismissed the lawsuit as “a wild swing that is unlikely to connect.”
“Tractor chasing lawyers have prematurely filed suit without any evidence of fault and in advance of the crop’s harvest,” said Monsanto’s general counsel, David Snively, in a news release yesterday that began: “Where’s the wheat?”
But Burns said this case “will boil down to the simple application of existing law.”