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In re Syngenta AG MIR 162 Corn Litigation

United States District Court, D. Kansas

December 7, 2018

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

          MEMORANDUM AND ORDER

          JOHN W. LUNGSTRUM, UNITED STATES DISTRICT JUDGE

         In this multi-district litigation (MDL), the Court provisionally certified a settlement class and preliminarily approved a settlement agreement resolving claims against Syngenta[1] (Doc. # 3532). Plaintiffs now seek final settlement approval pursuant to Fed.R.Civ.P. 23(e). On November 15, 2018, the Court conducted a final settlement hearing (of which the settlement class received due notice), at which the Court also heard argument concerning the total amount of attorney fees that should be awarded from the settlement fund. For the reasons set forth below and on the record of the hearing, the Court grants the motion for final approval (Doc. # 3776), and it will issue a separate order setting forth the granted relief as requested by plaintiffs. The Court also awards total attorney fees in the amount of one third of the settlement fund, or $503, 333, 333.33, and it therefore grants the petition for attorney fees filed by MDL co-lead counsel and settlement class counsel (Doc. # 3585) to that extent.[2] The Court approves the withdrawal of two objections (Doc. # 3684, withdrawal requested in Doc. # 3774; Doc. # 3673, withdrawal requested in Doc. # 3782), and it overrules all other objections to the settlement or to the total fee award (Doc. ## 3545, 3667, 3669, 3671, 3672, 3680, 3681, 3682). Finally, the Court grants as unopposed the special master's pending motion for mediation expenses (Doc. # 3564).

         I. Background

         Beginning in 2014, corn farmers and others in the corn industry filed thousands of similar suits against Syngenta in various jurisdictions, including class actions. The suits generally related to Syngenta's commercialization of genetically-modified corn seed products, Viptera and Duracade, which contained the trait MIR 162, without approval of that trait by China, an export market. The plaintiffs alleged that Syngenta's commercialization of its products caused the genetically-modified corn to be commingled throughout the corn supply in the United States; that China rejected imports of all corn from the United States because of the presence of MIR 162; that such rejection caused corn prices to drop in the United States; and that corn farmers and others in the industry were harmed by that market effect. In December 2014, this MDL was created, and it encompasses hundreds of suits brought by corn producers and non-producers. The Court appointed co-lead plaintiffs' counsel, who filed master consolidated class action producer and non-producer complaints in March 2015.

         On May 5, 2015, the Court ruled that Syngenta had improperly removed cases to federal court on the basis of the federal common law of foreign relations, see In re Syngenta AG MIR 162 Corn Litig., 2015 WL 2092435 (D. Kan. May 5, 2015) (Lungstrum, J.), and thus many cases were remanded to state court. On September 11, 2015, the Court granted in part and denied in part Syngenta's motions to dismiss. See In re Syngenta AG MIR 162 Corn Litig., 131 F.Supp.3d 1177 (D. Kan. 2015) (Lunstrum, J.). Most significantly, the Court rejected Syngenta's arguments based on a lack of duty and the economic loss doctrine, and plaintiffs' negligence, tortious interference, Lanham Act, and state consumer protection act claims survived at least in part. See Id. The Court also dismissed counterclaims and third-party claims asserted by Syngenta against certain grain handlers. See In re Syngenta AG MIR 162 Corn Litig., 2016 WL 1312519 (D. Kan. Apr. 4, 2016) (Lungstrum, J.).

         The parties engaged in substantial discovery, which was coordinated across multiple jurisdictions pursuant to orders issued by this Court and courts in Minnesota and Illinois. Millions of pages of documents were reviewed, hundreds of depositions were taken in multiple countries around the world, and numerous experts were retained and deposed. In September 2016, after an evidentiary hearing, the Court certified a nationwide class of corn producers to assert plaintiffs' Lanham Act claims and eight state-wide classes of producers to assert state-law common-law tort and statutory claims. See In re Syngenta AG MIR 162 Corn Litig., 2016 WL 5371856 (D. Kan. Sept. 26, 2016) (Lungstrum, J.). The Court subsequently granted summary judgment to Syngenta on the Lanham Act claims, see In re Syngenta AG MIR 162 Corn Litig., 249 F.Supp.3d 1224 (D. Kan. 2017) (Lungstrum, J.), but the Kansas class claims proceeded to trial. After the Court ruled on the parties' Daubert motions, see In re Syngenta AG MIR 162 Corn Litig., 2017 WL 1738014 (D. Kan. May 4, 2017) (Lungstrum, J.), the Kansas claims were tried to a jury over three weeks in June 2017, and the jury returned a verdict in favor of the Kansas class in the amount of $217, 700, 000. Trials were then scheduled for the claims asserted by the other certified state-wide classes.

         Thousands of similar suits against Syngenta were also filed in state court in Minnesota, and in May 2015 those suits were consolidated before a single judge, who appointed lead plaintiffs' counsel. In April 2016, the Minnesota court denied in large part Syngenta's motion to dismiss. The trial of one bellwether plaintiff's individual claims resulted in a mistrial in April 2017, and that plaintiff subsequently settled with Syngenta. The Minnesota class action trial began in September 2017, but that trial was never completed, as the parties reached the instant settlement. Similar claims were also litigated against Syngenta in state and federal courts in Illinois. Various ethanol plants also filed suits against Syngenta in five other states.

         In March 2016, this Court and several others with related cases appointed a special master for purposes of settlement. In August 2017, the 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. Syngenta has no right of reversion of any of that amount. The Agreement is contingent on certification of a nationwide settlement class, divided into 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.

         On April 10, 2018, the Court granted plaintiffs' motion for preliminary approval of the Agreement. See In re Syngenta AG MIR 162 Corn Litig., 2018 WL 1726345 (D. Kan. Apr. 10, 2018) (Lungstrum, J.). Specifically, the Court preliminarily approved the settlement; provisionally certified the settlement class and subclasses as set forth in the fourth amended complaint; appointed representative plaintiffs for the subclasses; appointed class counsel; approved the claims procedure, opt-out procedure, and notice plan; appointed the notice and claims administrator; appointed special masters to oversee the settlement and claims procedures; and imposed particular deadlines and set the hearing on final approval of the settlement.

         II. Final Approval of Settlement

         A. Satisfaction of Requirements for Approval

         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 Tennille v. Western Union Co., 785 F.3d 422, 434 (10th Cir. 2015) (internal quotation and citation omitted). The Court finds that each of the four factors cited by the Tenth Circuit is satisfied here and that this settlement is indeed fair, reasonable, and adequate.

         First, the Court finds that the settlement was fairly and honestly negotiated. The Agreement was reached by the parties only after a long period of negotiation over months and years. The settlement negotiation was overseen by special masters appointed by the Court, who confirmed that the parties negotiated at arm's length. There is no evidence of collusion in the negotiation of the settlement.[3] In addition, any potential conflicts among plaintiff's counsel was addressed by the Court's appointment of the PNC, which included attorneys representing different types of plaintiffs. During the negotiations, the different subclasses of plaintiffs were represented by different counsel to ensure proper representation of all plaintiffs with respect to the allocation of the settlement fund. Finally, the merits of plaintiffs' claims were thoroughly vetted through litigation that was hotly contested, in multiple jurisdictions, over a long period of time, by experienced and expert counsel with significant resources. As outlined above, that litigation included substantial and far-ranging discovery; briefing and argument of multiple dispositive and other substantive motions; preparation for multiple trials; and one multi-week class action trial in this Court. This is not a situation in which the parties proceeded quickly to settlement without serious litigation of the claims on their merits, such that there might be reason to suspect that the settlement was not fairly negotiated. Indeed, the protracted negotiation process and the vigor with which the parties litigated the merits of the claims provide additional assurance that this agreement was fairly and honestly negotiated.

         Second, the Court finds that serious legal and factual questions placed the litigation's outcome in doubt. Based on the evidence presented at the Kansas class trial, it is this Court's opinion that the litigation presents very close questions of fact. Although the jury at that trial found in favor of plaintiffs and awarded damages, it rejected the claim for punitive damages, and a reasonable jury could certainly have declined to award any damages whatsoever based on that evidence. Moreover, that trial involved only corn producer plaintiffs who did not use Viptera or Duracade; other plaintiffs' claims would have been subject to additional defenses, and thus the factual merits of those claims remain untested and in doubt. In particular, plaintiffs who used Syngenta's products would face contractual defenses, including the contractual economic loss doctrine. In addition, although this Court and others rejected Syngenta's argument for dismissal at the pleadings stage based on a lack of legal duty, the question was novel (no court had addressed the issue with respect to a trait approved in this country), the courts' rulings in plaintiffs' favor would be subject to challenge on appeal, and at least one trial court did dismiss claims against Syngenta on that basis. Similarly, other rulings by the Court on close legal issues (for instance, with respect to causation, damages, and the admissibility of expert testimony) would be vulnerable to attack on appeal.

         Third, the Court finds that immediate recovery of the settlement amount---even after an award of one-third of the settlement fund for attorney fees---would be more valuable than the mere possibility of a more favorable outcome after further litigation. 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.[4] No. objector has taken issue with the total amount to be paid by Syngenta in the settlement. As set forth above, despite the Kansas class verdict, the factual and legal issues remain hotly disputed and in doubt, and thus other plaintiffs face a significant risk of little or no recovery in future trials. Therefore, 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.

         Fourth, very experienced and expert counsel for all parties believe the settlement to be fair. In addition, 52 percent of class members have submitted claims, and although the settlement class members exceed 650, 000 in number, only 17 members have timely and properly exercised their right to opt out of the settlement (without revocation of the opt-out), and only nine objections by 15 members were submitted (without withdrawal of the objection). The fact that the class members have reacted so overwhelmingly in favor of the settlement further supports a finding that the settlement is fair and reasonable and adequate.

         Finally, as set forth in detail below, the Court finds that the objections filed in opposition to the settlement lack merit. The Court further finds that notice to the class after preliminary approval, which was extensive, repeated, and given in varied forms (including direct mailing), was more than adequate. As it did in granting its preliminary approval, the Court finds that the Agreement's opt-out procedures were reasonable and sufficient. The Court further finds that the claims procedure, which allowed for the submission of claims online based on records provided by the federal government, was reasonable and facilitated the submission of claims by the greatest number of class members, as evidenced by the very high number of claims received. The Court is also satisfied that the administrator has used and will continue to use reasonable efforts to allow members to cure deficiencies with their claims.

         Accordingly, for all these reasons, the Court finds that this settlement effected by the parties' Agreement is fair, reasonable, and adequate, and it therefore approves the settlement pursuant to Fed.R.Civ.P. 23(e).

         B. Objections

         The Court overrules all of the timely and properly submitted objections to aspects of the settlement. The Court addresses the objections more specifically as follows: 1. LORANCE PROPERTIES LLC In this very short objection (Doc. # 3545), the class member states that it does not like “any part of” the settlement, including the fee and service award requests; that the settlement will increase the cost of doing business; and that all parties should examine their motives. The objection, however, does not include any explanation why any aspect of the settlement or fee request is unfair or unreasonable, or why the settlement will have an adverse economic effect. Accordingly, the Court overrules this objection.

         2. JAMI HAYHURST / DALE BROOKOVER

         a. Attorney George Cochran submitted an objection (Doc. # 3667) on behalf of his clients, class members Jami Hayhurst and Dale Brookover. Plaintiffs have shown that Mr. Cochran is a serial objector to class action settlements, with a history of attempting to extract payment for the withdrawal of objections. In their reply brief (submitted by Mr. Cochran as counsel), these objectors argue that Mr. Cochran's history is irrelevant to whether their objections have merit. The fact that the objections are asserted by a serial or “professional” objector, however, may be relevant in determining the weight to accord the objection, as an objection carries more credibility if asserted to benefit the class and not merely to enrich the objector or her attorney. The credibility of this objection is further undermined by the following facts revealed in depositions of Mr. Brookover and Ms. Hayhurst: Mr. Cochran proposed to the objectors the non-attorney-fee-related bases for the objection; the objectors were motivated to act by Mr. Cochran's promise to seek $5, 000 service awards for them if the objection was deemed to have merit; Mr. Brookover did not even read the entire objection before he signed it; Mr. Brookover testified that he did not in fact object to any aspect of the settlement other than the attorney fee request;[5] and the interest of Ms. Hayhurst (Mr. Brookover's daughter) in the settlement is miniscule, as she held only a half-interest in 10 acres during one year. Nevertheless, in order to ensure the most exacting review of the settlement, the Court will address the merits of this objection.

         b. These objectors argue that the settlement improperly fails to distinguish between class and individual plaintiffs, and they request that the settlement be reformed to exclude individual plaintiffs. They argue that the settlement's abandonment of the original settlement term sheet's two-tiered approach raises red flags concerning the possible existence of secret side deals regarding fees. The Court overrules this objection. As the objectors concede, there is no evidence to support the existence of any such secret deal, and there is no basis to conclude that the size of the attorney fee request was affected by the decision to adopt a one-tier approach. Nor have the objectors shown that a two-tier approach (which would increase administrative costs) would benefit class plaintiffs, particularly in light of Syngenta's insistence during negotiations that it would not pay more than $1.51 billion and that it would settle only for a release of both individual and class claims. As the Court concluded in granting preliminary approval, the Agreement's equal treatment of all settlement class members, whether or not they filed individual suits, is reasonable. See 2018 WL 1726345, at *6 (rejecting similar objection).

         c. These objectors argue that the settlement is deficient because settling counsel did not engage in a choice-of-law analysis to distinguish stronger claims from weaker ones, with the result that all class members are treated equally, regardless of the state in which they reside. The objectors argue in their reply brief that Ohio statutory claims are stronger than claims under other states' law because Syngenta's conduct is a per se violation in Ohio and victims do not pay attorney fees if they win.

         The Court overrules this objection. In its preliminary approval order, the Court rejected this same argument for a choice-of-law analysis, see Id. at *5-6, and the objectors have not shown how the Court erred in that analysis. As the Court stated previously, the key for certification of a settlement class is ensuring the satisfaction of the requirements of Rule 23, and as discussed below, those requirements have been met here. The Court also rejects any argument that the Agreement is fatally unfair because it does not allow for a greater recovery for Ohio residents; no argument based on Ohio statutory law is included in the objection itself, and the objectors have not shown in their reply that Ohio farmers have better claims, as there is no analysis of Ohio law or any citation to the operative statute or to authority. Moreover, as plaintiffs note in response to the objection, the original Ohio class action claims did not include claims based on any Ohio statute, and any such claim would overlap with the Lanham Act claim asserted by the nationwide settlement class at any rate.[6]

         d. These objectors also argue that a Lanham Act class cannot be certified because this Court granted summary judgment in favor of Syngenta on those claims. As the Court explained in its preliminary approval order, however, plaintiffs would be entitled to appeal the Court's summary judgment ruling, and the relative merits of a particular claim are not relevant to the class certification issue. See Id. at *6 (citing authority). Thus, the Court overrules this objection.

         e. These objectors complain that the claims procedure calls for the administrator to use data from the federal government for those class members who reported acreage information to the government on Form 578s, while those members who did not report may simply estimate five years of data. They further argue that getting the acreage from the government instead of allowing the claimants to provide it will delay distribution and increase costs, and that the non-reporters may more easily over-report or commit fraud. The Court overrules this objection. First, the government has already provided the data, at no cost. Second, in arguing that reporters might under-report because reports are due early in the process, the objectors fail to appreciate that there is a later reporting each year as well, based on actual acreage. Third, in each case, the claimant farmer must declare, under oath or penalty of perjury, the proper figures, and there is no basis to assume that non-reporters will over-report more often than reporters did in submitting data to the government. The use of the government data has greatly streamlined the process, which likely contributed to the very high claim rate, and it is eminently reasonable to allow for the use of data that has already been reported by 99 percent of claimants.

         f. These objectors also object to the amount of attorney fees requested. For the reasons set forth below in the Court's discussion of the ...


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