Bayer Faces $100 Million Verdict in PCB School Trial

Bayer AG, the German pharmaceutical and agrochemical giant, has been ordered to pay $100 million in damages to four individuals who claim they developed various health issues from PCB exposure at a Washington state school. The verdict, handed down by a jury in King County Superior Court, is the latest setback for Bayer in its ongoing legal battle over PCB contamination.

The plaintiffs, who include teachers and staff members from the Sky Valley Education Center, alleged that their exposure to polychlorinated biphenyls (PCBs) in the school's lighting fixtures and caulking caused a range of neurological injuries. Bayer, which acquired Monsanto in 2018 and inherited the PCB-related liabilities, maintained that the levels of PCBs at the school were too low to cause the plaintiffs' claimed injuries and blamed the school district for failing to replace the outdated light fixtures.

The jury's verdict consists of $5 to $8 million for each of the four plaintiffs and an additional $5 million in punitive damages for each plaintiff due to the application of Missouri law, where Monsanto was formerly headquartered. The total award of $100 million is significantly less than the $4 billion plaintiffs had initially requested but still adds to the $1.1 billion in losses Bayer has already faced over the site.

Bayer has already paid out over $1 billion in settlements and verdicts related to PCB contamination at the Sky Valley school and is facing additional litigation from multiple states over PCBs in schools. The company's exposure to PCB litigation could exceed its $16 billion reserve by around $1 billion, according to a recent note from Bloomberg Intelligence. Additionally, Bayer is grappling with around 57,000 cases related to Roundup, its popular weed killer, which have not been settled.

The PCB-related litigation is just one of the legal problems related to the Monsanto purchase, and the high-profile lawsuits over whether Monsanto's Roundup weed killer caused plaintiffs' cancers have also weighed heavily on Bayer's stock. The company insists that Roundup is safe.

Bayer has a clear strategy to manage and mitigate these risks, which relate to actions that date back almost five decades. The company has broad indemnification agreements with many former PCB customers, which it is actively seeking to enforce to recover litigation-related costs. Additionally, Bayer is committed to participating in regulatory remediation processes where it is found to be a responsible party, bearing its share of the cost to clean up the environment.

As Bayer continues to navigate the complex legal landscape surrounding PCBs and Roundup, investors will be closely watching the company's efforts to manage its liabilities and mitigate the financial impact on its operations. The recent verdict in the Washington state trial serves as a reminder of the ongoing challenges Bayer faces in addressing the legacy issues inherited from its acquisition of Monsanto.