The Supreme Court on Thursday ruled for Bayer in its fight against claims that it failed to warn consumers that Roundup causes cancer, boosting the company's efforts to resolve costly litigation over its popular weedkiller.
In a 7-2 decision, the court said the pharmaceutical and agriculture company can't be held liable under state law for failing to warn about the alleged risk when a federal regulator -- the Environmental Protection Agency -- didn't require the product to carry a warning label.
Following the decision, Bayer A.G. surged more than 18% intraday on Thursday, marking their biggest intraday gain since March 2003.
Bayer, which has been engulfed in litigation over Roundup since acquiring Monsanto in 2018, argued that the Federal Insecticide, Fungicide, and Rodenticide Act -- which establishes a regulatory scheme for labeling weed-killing chemicals and similar pesticides -- prohibits states from imposing different or additional warnings than those required under federal law.
Ruling against Bayer would require the company to add a cancer warning to Roundup's label even though federal law requires it to use the EPA-approved label without a cancer warning, Justice Brett Kavanaugh wrote for the court. The goal of the federal law -- to create a uniform labeling system -- "would otherwise be impossible to achieve," he said.
In a statement, a Bayer spokesperson said Thursday's decision was, "good for science, farmers, and industries that depend on regulatory clarity for innovation. It should help significantly contain the Roundup litigation after nearly a decade of legal battles."
Bayer has long maintained that Roundup is safe to use. The EPA has repeatedly determined that it isn't likely to be carcinogenic in humans and doesn't need a label that includes a cancer warning. The World Health Organization's International Agency for Research on Cancer, however, classified glyphosate, its active ingredient, as "probably carcinogenic to humans" in 2015 .
Monsanto introduced Roundup to the market in 1974 and revolutionized agriculture by developing biotech crop seeds built to withstand the powerful herbicide. When Bayer bought the American company in a $63 billion deal in 2018, it was confronted with a wave of Roundup litigation that has ballooned to include thousands of cases filed in courts around the U.S. That legal risk has long weighed on Bayer's shares.
Bayer has said it intends to try to get its Roundup litigation under control this year. The company is also working to get a $7.5 billion proposed settlement with plaintiffs approved that would help resolve its litigation crisis, with the exception of a few pending court cases.
The company recently secured a victory from a federal judge in St. Louis, who sent Bayer's proposed settlement back to state court, overruling objections from plaintiffs who wanted it to be transferred to federal court. Analysts say the decision gives Bayer a higher likelihood of having its settlement approved.
The company's appeal to the Supreme Court stemmed from a case brought by John Durnell, a Missouri gardener who sued Monsanto in 2019 under the state law for not warning him about the dangers of glyphosate, a key ingredient in Roundup he alleges caused him to develop non-Hodgkin lymphoma. A jury awarded him $1.25 million in damages.
The Durnell verdict is one of several multimillion-dollar awards against the company in the Roundup cases that have gone to trial so far. Other early trials have ended in verdicts for the defense.
The Supreme Court verdict could help pave the way for the dismissal of thousands of cases against Bayer. Some plaintiffs could refile their cases, but it would eliminate a key argument about the alleged failure to warn.
The Supreme Court decision represents a significant victory for Bayer Chief Executive Bill Anderson, who took over the German conglomerate in 2023 with a mandate to help steer it through the litigation. Securing a win at the Supreme Court, along with its proposed settlement, are key parts of the company's strategy to finally move past the long-running Roundup litigation woes.
Bayer, which produces about half the world's glyphosate, has said it could stop producing the chemical if it can't get the litigation under control.
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