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In re Syngenta AG MIR 162 Corn Litigation

United States District Court, D. Kansas

April 10, 2018

IN RE SYNGENTA AG MIR 162 CORN LITIGATION, This Document Relates to All Cases Except: Louis Dreyfus Co. Grains Merchandising LLC
Syngenta AG, et al., No. 16-2788 Trans Coastal Supply Co., Inc.
Syngenta AG, et al., No. 14-2637 The Delong Co., Inc.
Syngenta AG, et al., No. 17-2614 Agribase Int'l Inc.
Syngenta AG, et al., No. 15-2279


          John W. Lungstrum United States District Judge

         This matter comes before the Court on the following motions: plaintiffs' motion for preliminary settlement approval (Doc. # 3506); the motion by the Toups/Coffman plaintiffs (“Toups”) to delay preliminary approval and for other relief (Doc. # 3499)[1]; a joint motion by plaintiffs and Syngenta[2] for leave to file the parties “walk away agreement” under seal (Doc. # 3508); and a joint motion for a stay of the MDL actions and an injunction against related actions against Syngenta (Doc. # 3512). On April 5, 2018, after the motions had been fully briefed, the Court conducted a hearing on these four motions. For the reasons set forth below and on the record of that hearing, the Court grants the motion for preliminary approval and the related joint motions, and it will issue separate orders setting forth the granted relief as requested by plaintiffs. The Court denies the motion filed by the Toups plaintiffs.

         I. Motion for Preliminary Approval of Settlement (Doc. # 3506); Toups's Motion for Delay (Doc. # 3499)

         A. Background

         In 2016, this Court and several others with related cases appointed a special master for purposes of settlement. On August 9, 2017, this Court appointed a Plaintiffs' Settlement Negotiation Committee (“PNC”) to work towards a settlement with Syngenta. In appointing the members of the PNC, the Court sought to “balance[] the goals of representing the interests of different groups of producer plaintiffs while maintaining a workably sized group to conduct settlement negotiations.” On September 25, 2017, the PNC executed a term sheet with Syngenta providing for a total settlement amount of $1.51 billion. Over the next several months, with the help of the special master and with oversight by the various courts, the PNC negotiated with Syngenta the terms of a final settlement agreement (“the Agreement”), which the parties executed on February 26, 2018.

         The Agreement's terms include the following: In exchange for releases of claims based on the sale and marketing of Viptera and Duracade, Syngenta will pay a total of $1.51 billion, with two initial deposits totaling $400 million and the remainder deposited within 30 days after final court approval (or by April 1, 2019, if later). Syngenta has no right of reversion of any of that amount. The Agreement is contingent on certification of a nationwide settlement class, consisting of four subclasses generally consisting of corn producers who did not purchase Viptera or Duracade; corn producers who did purchase one of those products; grain handling facilities (except for certain excluded exporters); and ethanol producers. The Agreement sets out the allocation of the settlement fund among the members of the four subclasses; a claims procedure; an opt-out procedure; and a notice plan.

         After execution of the Agreement and with leave of the Court, plaintiffs filed a fourth amended master class action complaint. By that complaint, plaintiffs seek certification of the same nationwide class and subclasses, asserting class claims based on the federal Lanham Act and certain Minnesota statutes. In addition and in the alternative, plaintiffs also assert negligence and other state-law causes of action, on behalf of statewide classes, under the laws of various states.

         Through appointed lead counsel, plaintiffs now move for preliminary approval of the Agreement and for the following additional relief: provisional certification of settlement class and subclasses; appointment of representative plaintiffs for the subclasses; appointment of class counsel; preliminary approval of settlement and claims procedures and the notice plan, and permission to disseminate the notice; appointment of the notice and claims administrator; appointment of special masters to oversee the settlement and claims procedures; and the imposition of particular deadlines and a setting for the hearing on final approval of the settlement.

         Prior to plaintiffs' filing of the motion for preliminary settlement approval, Toups filed a motion seeking the following relief: delay of consideration of the motion for preliminary approval; appointment to the PNC; and discovery of the term sheet and other information. Toups claims in the motion to represent over 9, 000 individual producer plaintiffs and to have filed the most individual producer cases in the federal MDL. Toups also filed a response in opposition to the motion for preliminary approval (in which the Hossley-Embry plaintiffs joined). No. other party has opposed the motion for preliminary approval.

         B. Preliminary Approval Standards

         Under Rule 23, a class action settlement may be approved by the Court only upon a finding that it is “fair, reasonable, and adequate.” See Fed. R. Civ. P. 23(e)(2).

In deciding whether to approve a class settlement, a district court considers whether (1) the settlement was fairly and honestly negotiated, (2) serious legal and factual questions placed the litigation's outcome in doubt, (3) the immediate recovery was more valuable than the mere possibility of a more favorable outcome after further litigation, and (4) the parties believed the settlement was fair and reasonable.

See Tenille v. Western Union Co., 785 F.3d 422, 434 (10th Cir. 2015) (internal quotation and citation omitted).

         Another judge in this district has set forth the standards for preliminary approval, relying in part on the Newberg treatise on class actions:

Because preliminary approval is just the first step of the approval process, courts apply a less stringent standard than that at final approval. District courts have developed a jurisprudence whereby they undertake some review of the settlement at preliminary approval, but perhaps just enough to ensure that sending notice to the class is not a complete waste of time. The general rule is that a court will grant preliminary approval where the proposed settlement is neither illegal nor collusive and is within the range of possible approval. While the Court will consider the Tenth Circuit's factors in depth at the final approval hearing, they are a useful guide at the preliminary approval stage as well.

See Nieberding v. Barrette Outdoor Living, Inc., 2015 WL 1645798, at *4 (D. Kan. Apr. 14, 2015) (internal quotations and citations omitted) (citing, inter alia, William B. Rubenstein, Newberg on Class Actions § 13.10 (5th ed.)). The Court agrees that those standards should govern consideration of the pending motion.

         The Court concludes that the standards for preliminary approval of the settlement have been met easily in this case. There is no suggestion of illegality or collusion here. The settlement negotiation was overseen by special masters, who have confirmed that the parties negotiated at arm's length. This litigation has been hotly contested in this Court and in other courts by experienced and expert counsel with significant resources, which litigation included discovery, dispositive and other substantive motions, and one class action trial in this Court (and the start to another trial in Minnesota). The factual issues remain disputed and contested, and important legal issues remain disputed (including, on appeal, the existence of a legal duty, issues of causation, and issues of damages). The amount of the settlement ($1.51 billion) is very large in an absolute sense, and it represents a significant percentage of the actual nationwide damages alleged by the MDL plaintiffs' experts.[3] Although the plaintiffs prevailed in the first trial that verdict is subject to posttrial review and appeal, and given the disputed nature of the factual and legal issues, other plaintiffs face a significant risk of little or no recovery in future trials; therefore, it is reasonable to believe that the immediate recovery of such a substantial sum is more valuable than the mere possibility of a more favorable outcome after protracted and expensive litigation over many years in the future. Counsel for plaintiffs and for Syngenta believe the settlement to be fair. Thus, the settlement is clearly within the range of settlements that could be approved by the Court.

         Plaintiffs also seek in this motion provisional certification of the settlement class and subclasses. In order for such classes to be certified, the usual requirements of Rule 23 must be met, except that trial management issues need not be considered. See Nieberding, 2015 WL 164798, at *2 (citing authorities). Although generally the requirements of the rule (including avoiding overbroad class definitions) must be given “undiluted, even heightened” attention in the settlement context, such heightened scrutiny is unnecessary if a class had already been certified before settlement. See Id. at *2-3 (citing authorities). In this case, the Court previously certified a nationwide Lanham Act class and statewide classes asserting negligence and other state-law claims. The proposed settlement classes go beyond those previously-certified classes, but the proposed classes are not overbroad, as each subclass group has asserted related claims against Syngenta.

         For the same reasons stated by plaintiffs in their supporting brief, the Court concludes that the requirements of Rule 23 are satisfied here for each of the proposed subclasses (producers who did not purchase Viptera or Duracade, producers who did, grain handlers, ethanol producers). The class members are numerous--corn producers number in the thousands, and plaintiffs estimate there to be over 1, 500 grain handlers and over 180 ethanol producers. The same common questions of fact and law identified by the Court in its previous certification order may be found here as well, and the proposed plaintiff representatives are typical and adequate. As confirmed by the trial of the Kansas class claims, the common questions predominate, and class treatment is superior to individual treatment (especially in this settlement context).

         C. Alleged Violation of the PNC Appointment Order

          In his motion, Toups has requested that the Court delay consideration of preliminary approval, appoint a representative to the PNC, and compel the production of certain documents and information, including the settlement term sheet, drafts of the settlement agreement, and any side deals. This motion was filed before plaintiffs filed the motion for preliminary approval, however, and Toups has now abandoned these particular requests for relief---in his reply brief and orally at the hearing, Toups requested only that preliminary settlement approval be denied and that the term sheet be enforced by the Court. Moreover, Toups has not shown that he is entitled to the relief sought in the motion. First, Toups's arguments against the settlement have been considered in the context of the preliminary approval motion; thus, there is no basis to delay that consideration. Second, Toups seeks appointment to the PNC, but that group's work has been completed, and Toups has not renewed that request in his reply or at the hearing. Toups does not argue that there should be more negotiating, but only argues that the term sheet (instead of the Agreement) should be enforced. Moreover, the Court appointed the members of the PNC; the PNC included attorneys to represent the interests of those, like Toups, with individual plaintiff clients; and the PNC was successful, negotiating a $1.51 billion settlement (a settlement amount of which Toups expressly approves). Thus, there is no basis to add a representative to the now-unnecessary PNC. Third, there is no basis to order the production of documents. Toups has now received a copy of the term sheet; confidentiality in the negotiating process was important to the success of that process; Toups has not established the relevance of any prior drafts of the Agreement; and there is no evidence of any collusion in the negotiation.

         Toups's primary argument is that he could not obtain information from the special master and PNC, and that the PNC therefore violated the provision in the Court's appointment order that required it to confer with other plaintiffs' counsel to ensure adequate representation of their interests. Again, however, confidentiality was important and reasonable to achieve a successful negotiation, and the Court did not intend by its order that the PNC provide all other plaintiffs' counsel with details concerning the particular terms being negotiated. In addition, the Court agrees ...

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