Corn seed exports at heart of legal tussle

GENETIC SCIENCE

STEVE KARNOWSKI MINNEAPOLIS • The first of tens of thousands of U.S. lawsuits is about to go to trial against Swiss agribusiness giant Syngenta over its decision to introduce a genetically engineered corn seed variety to the U.S. market before China had approved it for imports.

The lawsuits allege that Syngenta’s move wrecked an increasingly important export market for U.S. corn, and that the resulting price drops hurt all producers. Court filings show that Syngenta aggressively marketed the seeds even when it knew that Chinese approval was going to be a problem.

The first test case goes to trial Monday in Minneapolis. The second goes to trial in federal court in Kansas City on June 5. The two cases are meant to provide guidance for how the complex web of litigation in state and federal courts could be resolved.

Here are some issues: corn borers. With U.S. government approval, Syngenta began selling Viptera in the U.S. for the 2011 growing season. But China didn’t approve it until December 2014.

Court papers show that Syngenta initially assured stakeholders that China would approve MIR162 in time for the 2011 crop. But the date kept slipping. Some exporters sent shipments containing the trait to China anyway. After two years of accepting them, China began rejecting them in late 2013.

One expert working for the plaintiffs estimated the damage to U.S. farmers to be $5.77 billion; another pegged it at $4.68 billion.

Most plaintiffs didn’t grow Viptera, but China excluded their grain, too, because elevators and shippers typically mix grain from large numbers of suppliers, making it difficult to source corn that was free of the trait. So they say all farmers were hurt by the resulting price drop.

About 60,000 individual cases involving farmers from across the country, plus a class-action lawsuit on behalf of Minnesota farmers, are consolidated before Hennepin County District Judge Thomas Sipkins. Syngenta’s North American seed business is based in suburban Minneapolis.

The other big bloc, which includes cases from corn belt states other than Minnesota, has been consolidated before U.S. District Judge John Lungstrum in Kansas City, Kansas. The lawyers themselves aren’t sure how many farmers are covered there, but it’s a lot.

The first two cases will serve as bellwether trials, which courts often use when there are large numbers of lawsuits concerning similar legal issue. This way the lawyers can see how juries react and determine whether to settle other cases or take them to trial.

The trial that starts Monday in Minneapolis is for a lawsuit filed by Daniel Mesnick of Morse Bluff, Nebraska, who grew Viptera and claims about $150,000 in damages. It is expected to last up to three weeks.

Syngenta lawyer Mike Jones said the company sold a legal product fully approved for sale in the U.S. and other key importing countries, and that it complied with industry standards for international marketing.

The company also argues that China’s rejection had no meaningful impact on U.S. corn prices.

Syngenta points to U.S. Department of Agriculture figures showing that China was just a small market for U.S. corn in 2010 when Syngenta launched Viptera. The company says it was larger market forces, and not China’s decision, that drove prices down.

Jones said corn prices fell sharply in 2013, even before China rejected its first shipment, because of a bumper U.S. crop that brought prices down from record highs. Jurors will see evidence that the rejections conveniently let the Chinese walk away from contracts they signed when prices were much higher, he said.