Late last week, the Eighth Circuit Court of Appeals, in an action titled Bader Farms, Inc. [Appellee] and Bill Bader v. Monsanto Company [Monsanto] and BASF Corporation [BASF], affirmed in part and reversed in part the judgment in favor of Bader Farms against the defendants for $15 million in compensatory damages and $60 million in punitive damages. The appellee’s claims arose out of damage caused to its peach orchards from the “drift” of the herbicide dicamba from other properties.
Dicamba, the opinion explains, is an effective weedkiller but “traditional dicamba herbicides” harm crops and are “ ‘volatile,’ meaning they tend to vaporize and move off target.” Accordingly, “It was impractical-and unlawful-to spray dicamba herbicides over crops during growing season.”
In the early 2000s, both Monsanto and BASF “began developing dicamba tolerant seed” and litigated with each other over related intellectual property issues, ultimately reaching a settlement whereby “BASF relinquished rights to its dicamba-tolerant seed technology in return for ‘value share payments’ for each acre with dicamba-tolerant seed sold by Monsanto. Both companies began to develop lower-volatility dicamba herbicides.”
In 2015, Monsanto began selling Xtend, a “dicamba tolerant cotton seed,” even though the “EPA had not yet approved any lower-volatility dicamba herbicide” and notwithstanding “warnings from its own employees, academics and others against selling dicamba-tolerant seed without a lower-volatility dicamba herbicide.” Monsanto tried to “cut the risk” through sending advisory letters to farmers regarding “over the top use” of dicamba, offering discounts to “offset farmers’ “inability to benefit from the dicamba-tolerant trait,” and putting warning labels on seed bags
Despite Monsanto’s communication efforts, off label use of dicamba and “dicamba drift” litigation skyrocketed. “By July 2016, 115 complaints of off-target ‘dicamba-drift’ had been filed in Missouri’s Bootheel alone.”
Appellee sued Defendants for “negligent design and failure to warn” resulting in damage to its peach orchards from dicamba drift from 2015 to 2019. The jury awarded $15 million in compensatory damages and $250 million in punitive damages, which the District Court reduced to $60 million.
Defendants appealed a number of issues: whether Appellee proved causation; whether the measure of actual damages is the “[loss in] value of the land rather than lost profits; whether appellee’s estimate of loss profits was “speculative”; whether Monsanto and BASF should be jointly and severally liable for the compensatory damages; and whether the punitive damage award “was warranted under Missouri law and excessive under the United States Constitution.”
Except on the punitive damage issue, the Eighth Circuit upheld the District Court rulings. The Eighth Circuit rejected the argument that third party farmers “using dicamba herbicides illegally and contrary to express warnings” did not as a matter of law break the “chain of proximate causation” and that the District Court properly let the jury decide.
Defendants challenged the punitive damage award on three grounds: “punitive damages were not submissible [to the jury] under Missouri law; the punitive damage award could not be joint and several; and the amount was “unconstitutionally excessive.”
Defendants argued that it was an abuse of discretion to submit the punitive question issue to the jury, but the Eighth Circuit determined that Appellee “provided clear and convincing evidence that Monsanto and BASF acted with reckless indifference…”
The district court’s jury instruction only discussed Monsanto’s potential liability for punitive damages but adopted Appellee’s proposed judgment imposing joint and several liability. On appeal, BASF argued that is was entitled to the jury’s “individualized assessment of its wrongdoing.” The Eighth Circuit, while noting that had BASF and Monsanto formed a joint venture, joint and several liability for punitive damages may have been appropriate (see footnote 5 below) ruled that the civil conspiracy claim did not change the Missouri requirement that punitive damages be assessed against defendants separately.
Accordingly, the Eighth Circuit “vacates the punitive damage award and remands the case with instructions to hold a new trial only on the issue of punitive damages.” Given the remand, the Eighth Circuit did not address “whether the amount of vacated punitive damages is unconstitutionally excessive.”