The decision by the California Court of Appeal came after a San Francisco jury had in August 2018 awarded $289.2 million to the plaintiff Dewayne Johnson for his non-Hodgkin’s lymphoma, a sum later cut by the trial judge to $78.5 million (all figures US$).

Johnson’s case is separate from Bayer’s agreement on June 24 to pay up to $10.9 billion to settle nearly 100,000 lawsuits in the United States linking glyphosate-based Roundup to cancer.

If upheld, the verdict and payout could make it harder for Bayer to resolve lawsuits by other plaintiffs.

The German drugs and pesticides company inherited liability for the lawsuits when it bought Monsanto, which had produced Roundup, for $63 billion in 2018.

In a statement, Bayer called Monday’s decision “a step in the right direction” but said it may appeal to the California Supreme Court, calling the verdict inconsistent with the evidence and the law.

Bayer has long said regulators have deemed glyphosate safe. “We continue to stand strongly behind the safety and utility of Roundup,” the company said.

In its 86-page decision, the appeals court said Johnson offered “abundant” evidence that glyphosate, together with other ingredients in Roundup products, caused his cancer.

But it said the payout must be reduced because California law did not afford damages for a shortened life expectancy.

Johnson’s lawyer R. Brent Wisner called the decision another major victory for his client, who is known as Lee, despite the reduced damages.

“That Lee will not live an entire life with his wife and children should be compensable,” he said. “Hopefully, when this issue gets before the California Supreme Court, we can change this irrational law.”

— Reporting for Reuters by Jonathan Stempel and Tina Bellon in New York.

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The German company said that lawyers representing those preparing a class action had withdrawn a request for court approval of the $1.25 billion future claims scheme, part of a broader $10.9 billion agreement to settle close to 100,000 U.S. lawsuits related to Roundup (all figures US$).

The move would give both sides more time to address questions raised by Federal District Court Judge Vince Chhabria of the Northern District of California, who presides over the federal Roundup litigation, Bayer said.

Chhabria had raised concerns over Bayer’s plan to create an independent panel of scientific experts to help assess whether glyphosate-based herbicides such as Roundup caused cancer.

“Bayer remains strongly committed to a resolution that simultaneously addresses both the current litigation on reasonable terms and a viable solution to manage and resolve potential future litigation,” the company statement said.

Bayer said the wider agreement to settle current claims at a cost of up to $9.6 billion was not affected by Wednesday’s decision, which only impacted the agreement on future claims.

It declined to comment on the impact on the timetable for the bulk of the settlement.

“The (withdrawal) decision means that Bayer is back to square one when it comes to managing future claims, which will be worked up and filed over the coming years,” said David Noll, a law professor at Rutgers University who closely follows the litigation.

Elizabeth Cabraser, a lawyer representing the lead plaintiffs in the negotiations, said attorneys remained strongly committed to a fair and just resolution for all cases not yet included in the wider settlement.

Bayer is seeking to end legal disputes it inherited with its $63 billion takeover of Monsanto in 2018.

The agreement announced last month would apply only to U.S.-based cases, Bayer said at the time, and the company is “not contemplating” a settlement of similar Canadian cases related to glyphosate.

Court snag

On Tuesday, Bayer shares had fallen more than six per cent after Chhabria said that the court was inclined to oppose the part of the proposed settlement that deals with future claims. The case was due to be considered again on July 24. The shares slipped 0.7 per cent on Wednesday.

The company on Wednesday declined to say whether it would continue pursuing the idea of an outside scientific panel and said it would make adjustments to its existing plan to address Chhabria’s questions.

The San Francisco-based federal judge, in a filing on Monday, had questioned the idea of delegating the decision from judges and juries to a panel of scientists.

Chhabria also questioned whether potential claimants would want to remain bound by a ruling reached by the proposed scientific panel if research is still ongoing.

Regulators including the U.S. Environmental Protection Agency and the European Chemicals Agency, have determined glyphosate to be non-carcinogenic, supporting Bayer’s claim that the active ingredient in its Roundup product is safe for agricultural use.

However, in 2015, the World Health Organization’s cancer research arm determined the herbicide to be a “probable carcinogen,” and since 2018, three consecutive U.S. juries, who listened to scientific evidence from both sides during trials, found that Roundup causes cancer.

— Reporting for Reuters by Patricia Weiss and Tina Bellon; additional reporting by Arno Schuetze in Frankfurt.

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After more than a year of talks, however, some details and the overall amount of the settlement have yet to be finalised, one of the sources said on condition of anonymity.

German business daily Handelsblatt earlier on Tuesday reported a deal was imminent, with Bayer pledging $8 billion to $10 billion to settle the claims, including a $2 billion buffer for future cases (all figures US$).

The drugs and pesticides group, which said in May that talks were progressing, is keen to draw a line under the legal dispute over Roundup and other glyphosate-based herbicides, which it inherited via its $63 billion takeover of Monsanto in 2018.

Its shares rose six per cent to 72.78 euros at 2 p.m. GMT. Still, they were more than 20 per cent below their value August 2018, when Bayer lost the first of three court cases with damages in the tens of millions being awarded to plaintiffs.

Bayer, which has repeatedly said the product is safe to use and has approval from market regulators, is appealing all three jury verdicts.

In April, Bayer’s management regained shareholder support for its handling of the litigation process.

A Bayer spokesman declined to comment. Perry Weitz of Weitz and Luxenberg, one of the leading plaintiffs’ firms involved in the Roundup litigation, also would not comment.

Court-appointed mediator Ken Feinberg, who started work little over a year ago, also declined comment.

The company’s supervisory board was due to discuss and vote on the settlement in the coming days, Handelsblatt cited company and negotiating partner sources as saying.

As of April, the company had been sued by 52,500 U.S. plaintiffs who blame Roundup and other glyphosate-based herbicides for their cancer, up from 48,600 in February.

— Reporting for Reuters by Tina Bellon and Patricia Weiss; writing by Ludwig Burger.

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“While Bayer is constructively engaged in the mediation process, there is no comprehensive agreement at this time. There also is no certainty or timetable for a comprehensive resolution,” the company said in a statement in reference to the settlement talks.

The fourth jury trial in the Roundup litigation was scheduled to begin in St. Louis on Friday morning, but never got underway as lawyers for the company and the cancer patients sat down to discuss a hold of the trial.

The lawsuit would have marked the first multi-plaintiff trial over whether glyphosate, Roundup’s active ingredient, is carcinogenic, and the first trial outside of California. St. Louis is the hometown of Roundup-maker Monsanto, a unit Bayer acquired in a US$63 billion deal in 2018.

Three consecutive juries previously found the company liable for causing cancer with damages of tens of millions of dollars awarded to each plaintiff. Bayer is appealing those verdicts.

Court-appointed mediator Ken Feinberg, who leads the settlement discussions, has put the number of Roundup cancer claimants at more than 75,000 while Bayer said the claims it has been served with in court were below 50,000.

Bayer on Friday said it will continue the mediation process under Feinberg in good faith.

— Reporting for Reuters by Tina Bellon in New York.

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Trading was volatile and shares fell more than 12 percent after hours on news of a 3.25 million share offering that includes 3 million shares from selling stockholders.

Proceeds are earmarked to raise funds to expand its manufacturing facilities that are being stretched by booming demand for its meat alternatives. Executives on a call with analysts declined to comment on the offering.

Beyond Meat’s shares have surged over 780 percent since the IPO in May as the company’s meat alternatives entered the menus of restaurants such as Carl’s Jr and on shelves of grocers including Kroger Co.

Plant-based meat alternatives have seen booming interest from consumers and restaurants, supporting startups like Beyond Meat and its competitor Impossible Foods, and even sparking interest from veteran meat companies such as Tyson Foods Inc and Perdue Foods, which now offer meat protein products mixed with plants.

“For another growth stock, the top-line beat and raises would be enough to see a post-market rally, but there are a lot of Beyond Meat investors out there looking for any excuse to sell a stock that has rocketed so much since its IPO,” said Kamal Khan, analyst at financial markets platform Investing.com.

Beyond Meat products are now sold at more than 53,000 retailers and restaurants worldwide, with demand boosted by the grilling season underway, Beyond Meat’s CEO Ethan Brown said on Monday.

At supermarket chain Morton Williams, which owns 16 locations across New York City, some customers are buying Beyond Meat burger patties and sausages by the case, according to Victor Colello, the chain’s director of meat and fish.

“Beyond Meat is really flying off the shelves. My business with it has almost doubled and we’re sold out at times,” Colello said. The latest version of the burgers is made from peas, brown rice, sunflower seeds and mung beans.

Net revenue rose nearly four-fold to $67.3 million in the three months ended June 29, above Wall Street’s estimate of $52.71 million, according to Refinitiv IBES data.

The company said it expects net revenue to rise over 170 percent to $240 million in 2019, up from the prior $210 million it had forecast just last month.

The El Segundo, California-based company reported a net loss of $9.4 million, or a loss 24 cents per share, compared with a loss of $7.4 million, or a loss of $1.22 per share in the year-ago period.

No sign of slowing

Karen Formanski, an analyst at Mintel who authored a consumer research report on plant-based protein, said there were no signs of the meat alternatives market slowing, with 38 percent of U.S. consumers trying to add more plant-based protein to their diet.

“But with growing competition, criticism over processed food and clean eating getting more important, companies will have to adapt and offer more variety than just burgers” Formanski said.

Brown on Monday rejected growing criticism over Beyond Meat’s products being overly processed and unhealthy, saying it was not a question of whether they were processed but how.

The company seeks to further diversify its protein sources without relying on genetic modification, Brown said.

“There are an almost endless amount of crops you can pull from…and it is really important that Beyond is leading the effort of bringing new proteins into the market,” Brown said.

The CEO said he was confident his company could take on competition from Impossible Foods, which relies on genetically modified soy seeds to produce its burger patties, because of consumers hesitancy surrounding those technologies.

Impossible Foods initially planned to roll out to retail stores this fall, but has continuously pushed back plans due to supply shortages.

Analysts during Monday’s call pressed Beyond Meat executives for details on looming supply chain bottlenecks as demand continues to surge.

Brown said the company would expand its in-house manufacturing facilities in Missouri, buy new equipment, while continuing to outsource the packaging of its products by adding new partners.

“That’s not to say we won’t have some periodic disruptions that may create temporary shortages,” the CEO said.

Brown said the company currently had a sufficient and continued supply of the protein it needs for its burgers, also thanks to the entry of larger players, including DuPont, into the pea protein market.

Even so, the company has skeptics. Some 46 percent of the company’s publicly traded shares are shorted, according to research group S3. Those investors, owning shares worth $1.1 billion, are betting on the company to miss its targets and the share price to drop.

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Superior Court Judge Winifred Smith of the California Superior Court in Oakland said the jury’s billion-dollar punitive damage awards were excessive and unconstitutional, but rejected Bayer’s request to strike the punitive award outright.

Under Smith’s final order, California couple Alva and Alberta Pilliod would receive roughly $17 million in compensatory damages and $69 million in punitive damages, down from $55 million and $2 billion, respectively.

The plaintiffs still have to formally accept the reduced awards. Brent Wisner, a lawyer for the Pilliods, in a statement on Friday welcomed the decision.

“While we believe the reduction in damages does not fairly capture the pain and suffering experienced by Alva and Alberta, the overall result is a big win,” Wisner said.

Bayer said in a statement on Thursday that Smith’s decision to slash the award was a step in the right direction, but added it would file an appeal.

“We continue to believe that the verdict and damage awards are not supported by the evidence at trial and conflict with the extensive body of reliable science and conclusions of leading health regulators worldwide that confirms glyphosate-based herbicides can be used safely and that glyphosate is not carcinogenic,” the company said.

Bayer faces Roundup cancer lawsuits by more than 13,400 plaintiffs across the United States. The German company bought Roundup maker Monsanto in a $63 billion deal last year, but its share price has since tumbled over the glyphosate litigation.

Plaintiffs allege Roundup causes non-Hodgkin’s lymphoma and that Monsanto for decades tried to influence scientists and regulators to bury cancer evidence. Bayer denies those allegations.

The company had asked Smith to strike the punitive damages award in the Pilliods’ case, arguing that hundreds of studies and assessments by regulators worldwide concluded the herbicide to be safe for human use.

But the judge in her Thursday order rejected those arguments.

“In this case there was clear and convincing evidence that Monsanto made efforts to impede, discourage, or distort scientific inquiry and the resulting science,” Smith said.

Bayer to date has lost three U.S. jury trials in the Roundup litigation, with juries in California granting multimillion-dollar awards. It is appealing the decisions.

In August, the company is scheduled to face its first trial outside California at a courthouse in St. Louis, Missouri. Monsanto has recruited Missouri-based expert witnesses to make its case in a place where it has century-old roots but where juries often hit companies with huge damages.

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A letter from the juror written on July 4 was posted to the court docket on Monday as part of legal filings by Bayer. The company accused the juror of bias and called on the judge to disregard the letter in his decision making.

In the letter, the unidentified juror told U.S. District Judge Vince Chhabria in San Francisco that the $80 million in awards “were no accident” and the result of “meticulous planning” by the jury (all figures US$).

The letter was a response to statements by Chhabria during a court hearing last week, when the judge said he would have to reduce the $75 million punitive damages portion of the award on constitutional grounds.

Following a four-week trial, a federal jury on March 27 awarded $5 million in compensatory and $75 million in punitive damages to Edwin Hardeman, who was diagnosed with non-Hodgkin’s lymphoma in 2014.

U.S. Supreme Court rulings limit the ratio of punitive to compensatory damages to nine-to-one, which in this case would put the maximum for punitive damages at $45 million.

In the letter, the juror said higher damages ratios were allowed in extraordinary cases, echoing arguments Hardeman’s lawyers made during Tuesday’s hearing, when they urged Chhabria to affirm the total award.

“Based on the evidence provided, ‘reprehensible’ is much too kind a word to describe the actions of the Monsanto employees,” the juror wrote.

Bayer, which bought Roundup maker Monsanto for $63 billion last year, says Roundup and its active ingredient glyphosate are safe for human use and not carcinogenic. It faces Roundup cancer lawsuits by more than 13,400 plaintiffs.

The company in filings on Monday only identified the letter writer as “juror #5.”

A lawyer for the company said he had observed the juror attending Tuesday’s hearing, talking to Hardeman’s lawyers and hugging Hardeman and his wife. Bayer said juror No. 5 had also displayed bias against the company during jury selection.

It was juror No. 5 who was responsible for bringing allegedly improper comments by another juror to the attention of the judge who ultimately excused that other juror without giving Monsanto a chance to challenge the dismissal, according to court filings by Bayer.

Last week’s letter marks the second time jurors in the Roundup litigation called on judges to uphold their verdicts.

In October, several jurors who delivered a $289 million verdict against Monsanto, finding Roundup caused a man’s terminal cancer, wrote to the San Francisco trial court judge, asking her to “respect and honor the verdict.”

The judge ultimately upheld the jury’s finding but reduced the award to $78 million. The case is on appeal.

Legal experts at the time said the letters were unusual, as jurors generally do not engage with post-trial proceedings following a verdict.

Bayer on Monday said the letters deprived it of fair trials.

“The fact that jurors from both trials wrote letters in support of constitutionally impermissible verdicts is highly unusual, and generates further anti-Monsanto bias in the Bay Area that will infect future Roundup trials,” the company said.

— Reporting for Reuters by Tina Bellon in New York.

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U.S. District Judge Vince Chhabria in San Francisco said the jury’s $75 million punitive damages award to plaintiff Edwin Hardeman in March could not stand (all figures US$).

“It’s quite clear that under the Constitution I’m required to reduce the punitive damages award and it’s just a question of how much,” Chhabria said during a court hearing in which lawyers for both sides discussed the company’s request to overturn the verdict. Chhabria said he would issue a ruling by the end of next week.

Following a four-week trial, a federal jury on March 27 awarded $5 million in compensatory and $75 million in punitive damages to Hardeman, who was diagnosed with non-Hodgkin’s lymphoma in 2014.

U.S. Supreme Court rulings limit the ratio of punitive to compensatory damages to nine-to-one.

Chhabria said he was also considering reducing the compensatory damages award because Hardeman was now in full remission and unlikely to suffer as much as he had in the past.

Bayer, which bought Roundup maker Monsanto for $63 billion last year, says Roundup and its active ingredient glyphosate are safe for human use and not carcinogenic.

The company faces lawsuits by more than 13,400 plaintiffs nationwide and a series of Roundup jury verdicts against Bayer have prompted its share price to plummet. Under pressure from activist shareholders, Bayer on Wednesday said it set up a committee to help resolve the litigation and hired an external lawyer to advise its supervisory board.

Bayer had asked Chhabria to completely reverse the jury verdict in Hardeman’s case in light of scientific evidence and assessments by regulators finding glyphosate to be safe.

Brian Stekloff, a lawyer for Bayer, on Tuesday said Monsanto went “above and beyond” to meet regulatory requirements, warranting a complete reversal of the punitive damages award.

But Chhabria disagreed, saying jurors had seen sufficient evidence that Monsanto did not care whether its products cause cancer, instead focusing on undermining people who were raising concerns.

“There was nothing suggesting that anybody at Monsanto viewed this issue objectively or with any consideration for the life of human people,” the judge said.

— Tina Bellon reports on U.S. business and liability law for Reuters from New York.

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Tyson is betting that meat eaters wanting healthier diets will see their blend as offering a meat taste and vegetable health.

It joins other food companies vying for a share of the U.S. alternative meat market which analysts estimate to be worth US$100 billion by 2035 as consumers seek to reduce meat consumption amid growing concerns over health risks and environmental hazards of industrial animal farming.

Tyson will sell blended protein burgers made from beef and pea protein, and sausages and meatballs that combine chicken with plants including chickpeas, black beans and quinoa, the company said in a statement. It also will offer vegetarian nuggets.

California upstarts Beyond Meat and Impossible Foods each sell 100 per cent plant-based meat alternatives to retailers and fast food chains across the United States.

Tyson sold its 6.5 per cent stake in Beyond Meat in late April, just days before the company went public, to focus on the development of its own plant-based products.

Tyson shares were up around one per cent at $82.65, while those of Beyond Meat were down 4.4 per cent at $135.68.

Tyson’s plant-centered products, under its new Raised + Rooted brand, will be sold through its customers, sales outlets and foodservice operators, Justin Whitmore, head of Tyson’s alternative protein business, said in an interview, declining to elaborate.

The largest U.S. meat processor, known for its Ball Park hot dogs and Jimmy Dean sausages, will launch the nuggets in the summer and the blended burgers in the fall.

Whitmore said it was too early to estimate revenues, calling Tyson’s plant-based business highly incremental, but he noted that could change.

“The double-digit growth in the sector is largely driven by meat eaters who want the health and nutrition that they perceive to come from plants along with the taste they’ve always had from animal protein,” Whitmore said, adding that the company was working on additional plant-based products.

Analysts at Mizuho Securities USA cast doubt on the company’s blended protein approach.

“We’re less confident in blended meat/plant products as we believe in the early stages of alternative meat, consumers want to make a simple binary decision between eating meat or not,” the analysts said in a note.

Tyson CEO Noel White said in a statement the company remained firmly committed to expanding its traditional meat business, but is shifting toward becoming a protein company.

Other companies following a similar path include Canadian packaged meat producer Maple Leaf Foods, whose vegan “ground beef” and burger patties, sold under its LightLife brand, will be on U.S. store shelves this summer.

Nestle, the world’s biggest packaged foods group, is aiming to sell a pea-based veggie patty called Awesome Burger under its U.S. plant-based Sweet Earth brand in the fall.

— Tina Bellon is a business reporter for Reuters in New York, covering consumer goods, health, science and litigation.

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The company said it expects to record revenue of $210 million in 2019 (all figures US$), with break-even earnings, before interest, tax, depreciation and amortization (EBITDA).

Analysts on average forecast full-year sales of $205 million, and a loss, before interest, tax, depreciation and amortization, of $10.28 million, according to Refinitiv IBES data.

The company has captured a wide audience for its imitation meat patties and sausages made from ingredients such as pea protein, coconut and canola oil.

The burgers, a hit with consumers switching to a “flexitarian” diet, feel, smell and taste like real meat.

Beyond Meat’s sales have increased five-fold since it began selling its flagship Beyond Burger in 2016.

“We are very conservative and view this as a floor,” CEO Ethan Brown said on a conference call when asked about the revenue forecast. The company does not count customers who are using its products as a part of a testing project.

“As we are entering into additional test and distribution channels and take on new customers, those will be additive to our numbers,” Brown said.

The company is also working on making its plant-based products cheaper than animal protein to capture more market share.

Beyond Meat, whose rivals include U.S.-based Impossible Foods, is likely to face increasing competition in the niche market as companies such as Nestle and Tyson Foods ready their own lines of products.

“Beyond Meat, right now, does have the first-mover advantage,” said Megan Brantley, vice-president of research at LikeFolio.

The California-based company said its net loss widened to $6.6 million in the three months ended March 30, from $5.7 million a year earlier.

First-quarter net revenue came in at $40.2 million, an increase of 215 per cent, the company said. Analysts had expected revenue of $38.9 million.

“Beyond Meat is in a business that could be absolutely incredible,” John Gillin, an analyst with Stansberry Research, said.

In the Canadian market, Beyond Meat in April announced deals to sell its Beyond Burgers for home grilling through several major grocery retail chains. Fast food chains including A+W and Tim Hortons have also added Beyond Meat products to their menus.

Beyond Meat and its contemporaries have, however, seen some pushback recently from Canada’s meat sector.

Quebec’s Union des producteurs agricoles (UPA) and cattle producer group Producteurs de bovins du Quebec said last month they would approach the Canadian Food Inspection Agency to prohibit the use of the word “meat” in marketing vegetable protein products.

For its part, the Canadian Cattlemen’s Association last month said its view is that “for a product to be labelled or marketed as meat it must meet the legal definition of ‘meat’ or ‘meat byproduct'” as per federal food regulations.

Recent efforts to stop food firms from labelling “vegetarian-based” products as “meat” in Canada is part of an “international movement towards achieving a common nomenclature for meat derived from animal-based proteins,” the CCA said in a statement.

— Reporting for Reuters by Nivedita Balu and Tina Bellon. Includes files from Glacier FarmMedia Network staff.

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