Two separate major actions related to agricultural biotechnology were significantly addressed this month in federal court.
Syngenta Seeds v. Bunge North America Inc.
On Dec. 12, the Syngenta Seeds and Bunge North America Inc. filed with the federal district court in Iowa a stipulation that Syngenta had agreed to dismiss all of its claims against Bunge, including specifically the sole claim that remained following the court of appeals’ decision to remand that claim to the lower court after denying all of Syngenta’s other claims.
Syngenta’s marketing of a strain of genetically modified corn seed – Agrisure Viptera MIR162 – beginning in the fall of 2010 was the core of this case. Because the variety was not approved in China, which maintained a zero-tolerance on imports of corn from seed with unapproved genetically modified traits, Bunge declined to accept corn grown from Viptera MIR162 seed. Syngenta sued, alleging that Bunge breached obligations under the U.S. Warehouse Act (USWA) and its warehouse licensing agreement with the federal government. Syngenta also claimed false advertising by Bunge in violation of the Lanham Act. The trial court ruled in favor of Bunge on all three claims, and Syngenta appealed to the U.S. Court of Appeals for the Eighth Circuit.
In its prior decisions in August and October 2014, the court of appeals noted that pursuant to China’s zero-tolerance policy, Chinese officials could prohibit an entire shipment of corn from entering its market if the shipment contained even traces of corn a genetically modified trait it had not approved for import. The court also noted that in the course of Bunge’s business – including the purchase, storage, processing and transport of agricultural products for foreign markets – Bunge had purchase contracts with farmers containing provisions authorizing Bunge to refuse products containing genetic modifications for which import approval had not been obtained in foreign export markets.
In its the claim under USWA, Syngenta argued that Bunge’s obligation under that law to treat depositors of agricultural products in a fair and reasonable manner entitled Syngenta to sue Bunge for damages related to its lost market share, profits and goodwill that allegedly resulted from Bunge’s refusal to accept Viptera corn. The appellate court agreed with the lower court in rejecting Syngenta’s assertion, ruling that nothing in the law expressly or implicitly authorized Syngenta’s cause of action in this case.
Similarly, the court of appeals upheld the lower court’s dismissal of Syngenta’s claim that it was entitled to damages as a third-party beneficiary of the licensing agreement between Bunge and the federal government related to Bunge’s status as a federally licensed warehouse operator. The court stated it found no indication in the licensing agreement of intent to benefit a seed producer.
The trial court also had granted summary judgment in favor of Bunge on Syngenta’s claim of false advertising under the Lanham Act. In its review of the claim, the court of appeals noted that until very recently, there had been a split among the different judicial circuits regarding the approach to assess claims under the Lanham Act. The trial court decided this case under the then-controlling approach in this circuit. However, the U.S. Supreme Court subsequently resolved the split among the different circuits in an unrelated decision, which established a “zone-of-interests” test and “proximate causality” requirement for cases involving the Lanham Act. For this reason, the appellate court remanded Syngenta’s claim under the Lanham Act for the trial court to make an initial determination on Syngenta’s standing to bring the claim under the new approach established by the Supreme Court.
Latest Development: Pursuant to the court of appeals’ order, the district court on Dec. 6, had scheduled the remaining claim for trial to commence in February 2016. However, when on Dec. 12 the parties filed with the court the stipulation that Syngenta had agreed to dismiss with prejudice all remaining claims and causes of action asserted in the matter – including the Lanham Act claim – this litigation consequently concluded.
Syngenta AG MIR162 Corn Litigation
On Dec. 11, the U.S. Judicial Panel on Multidistrict Litigation (MDL Panel) ordered the consolidation and transfer of lawsuits filed nationwide against Syngenta for its decision to commercialize corn seeds containing a genetically modified trait, known as Agrisure Vipter MIR162, despite lacking import approval by the Chinese government. The cases were transferred to Judge John Lungstrum of the federal district court of Kansas for coordinated and consolidated pretrial proceedings.
(Note: The MDL Panel is a judiciary authority created by an Act of Congress in 1968. The panel’s role is to 1) determine whether civil actions pending in different federal districts involve one or more common questions of fact such that the actions should be transferred to one federal district for coordinated or consolidated pretrial proceedings; and 2) select the judge or judges and court assigned to conduct such proceedings. The panel consists of seven sitting federal judges, who are appointed by the Chief Justice of the U.S. Supreme Court.)
Plaintiffs in the cases are corn growers and exporters who allegedly suffered economic losses from the introduction of MIR162 into the marketplace and China’s refusal to accept it. At the time of the Dec. 11 order, the MDL Panel was notified of 168 potentially related actions in various districts. That list subsequently has grown to more than 360 separate actions. Significantly, by Dec. 18, it was widely reported that 20 separate states had joined the ongoing litigation against Syngenta.
The massive consolidation thus far includes individual cases filed in various federal courts across the country including courts in Alabama, Arkansas, Georgia, Kansas, Kentucky, Illinois, Indiana, Iowa, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Carolina, Ohio, South Carolina, South Dakota and Tennessee. The 20 states named in complaints thus far joining the litigation against Syngenta are Alabama, Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Dakota, Tennessee and Wisconsin.
In its decision, the MDL Panel concluded that the actions involve common questions of fact regarding Syngenta’s decision to commercialize MIR162 without Chinese approval to import corn with that trait. The panel also determined that centralization would serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation. As with past litigation involving allegedly improper dissemination of genetically modified crops, the panel determined that centralization of the cases will eliminate duplicative discovery, avoid inconsistent pretrial rulings (particularly on class certification) and conserve the resources of the parties, counsel and the courts. In its decision, the panel specifically referred to how it had similarly handled prior agricultural biotechnology-related litigation involving Starlink corn in 2001, genetically modified rice in 2008 and genetically modified wheat plant material in 2013.
Given the nature of the nationwide litigation, these steps by the MDL Panel were expected, and no party opposed the consolidation and centralization of these cases. However, the defendants – all from the different states – had suggested alternative locations for the transfer to occur in Minnesota, Missouri, Iowa or Illinois. In its decision, the MDL Panel noted that the district court in Kansas was particularly appropriate and accessible, and that Lungstrum was “well-versed” in the “nuances” of complex, multidistrict litigation. The docket of cases ultimately to be addressed by Lungstrum is expected to grow significantly.