(Bloomberg) -- Bayer AG won a tentative ruling slashing the lion’s share of a $289 million verdict in the first trial over claims that Roundup weed killer causes cancer and a judge is considering a new trial on whether the company is at fault for an ex-school groundskeeper’s illness.
A San Francisco state judge indicated ahead of a hearing Wednesday on the company’s challenge to the August verdict that she’s inclined to set aside $250 million in punitive damages against Monsanto, which Bayer acquired this year.
The ruling could shift momentum in the company’s favor as it defends against thousands of U.S. lawsuits. American depositary shares of Leverkusen, Germany-based Bayer jumped 6.3 percent Wednesday to close at $79.50 in New York.
Superior Court Judge Suzanne Ramos Bolanos said that even if she doesn’t vacate the punishment damages, she “would grant a new trial on grounds of insufficiency of the evidence to justify the award for punitive damages.” She also questioned whether the evidence introduced at trial supports the jury’s conclusion that Bayer was liable for plaintiff Lee Johnson’s non-Hodgkin lymphoma based on his exposure to the key ingredient in Roundup, glyphosate.
If the company can persuade the judge to erase or slash the nine-figure verdict -- the first case to go to a jury among 8,700 people in the U.S. who blame the popular herbicide for their cancer -- legal experts say some plaintiffs may be less eager to pursue their claims.
Lawyers for the plaintiff and the company declined to comment on the tentative ruling ahead of Wednesday’s hearing.
Jonas Oxgaard, an analyst at Sanford C. Bernstein & Co., estimated that Bayer’s market value was discounted by as much as $15 billion because the San Francisco verdict represents the larger cloud of Roundup liability trailing the company after it acquired Monsanto. More trials are scheduled for February.
“Getting the first ruling overturned would be huge for Bayer -- likely reversing most of the discount,” Oxgaard said in a recent email.
The $289 million award was the second-largest of the year for a product defect case in the U.S. and the ninth-largest verdict overall. The punitive part of the award is so “excessive” that it “shocks the conscience,” Monsanto argued in a court filing.
In her tentative ruling, Bolanos said the punitive damages aren’t justified because Johnson’s lawyers didn’t present “clear and convincing evidence of malice and oppression by Monsanto.”
The case is Dewayne Johnson v. Monsanto Co., CGC-16-550128, California Superior Court, County of San Francisco (San Francisco).
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