Michigan Pensions Sue Bayer over $63 Billion Monsanto Acquisition

Chemical company allegedly misled investors about ‘significant liability risk’ from ‘thousands’ of lawsuits against Monsanto.


Two Grand Rapids, Michigan, pension funds are suing chemical giant Bayer over alleged
misrepresentations and omissions regarding its $63 billion acquisition of agrochemical company Monsanto, which is facing “thousands of personal injury lawsuits” over claims that its Roundup weed killer causes cancer.

The lawsuit alleges that Bayer downplayed and misled investors about the “significant liability risk” of the lawsuits against Monsanto. According to the complaint, Bayer made false and misleading statements to investors during the class period, which spans from May 23, 2016, to March 19, 2019, as it described the acquisition as “a compelling transaction for shareholders” that “will translate into attractive financial benefits” for Bayer and its shareholders.

“When Bayer finally consummated the acquisition, not only had thousands of personal injury lawsuits related to Roundup exposure been filed against Monsanto,” stated the complaint, “but plaintiffs in several of the first Roundup cancer cases had survived motions to dismiss, obtained damaging discovery, and fended off challenges to expert testimony and pretrial motions.”

The lawsuit cites an August 2018 California state court case in which the jury in the first Roundup cancer case to proceed to trial unanimously found that Roundup was a “substantial factor” in causing the plaintiff to develop non-Hodgkin lymphoma. It also said the jury found that Monsanto acted with “malice or oppression” and should be punished for its conduct, and it ordered Monsanto to pay $39 million in compensatory damages and $250 million in punitive damages. The punitive damages were later reduced to $39 million.

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The suit also cites a March 2019 jury verdict in the first federal Roundup cancer lawsuit to proceed to trial that found the plaintiff’s exposure to Roundup was “a substantial factor” in causing his non-Hodgkin lymphoma.

“In truth, defendants knew or recklessly disregarded that the acquisition would not result in the benefits for Bayer that defendants had represented, due to Monsanto’s significant exposure to liability risk related to Roundup,” said the lawsuit. “As a result of defendants’ misrepresentations, Bayer ADRs traded at artificially inflated prices.”

During the class period, Bayer’s stock price declined approximately 33% to $17.85 per ADR from a high of $26.59.

In response to the lawsuit, Bayer said it is confident that it acted in accordance with its obligations under the applicable securities laws. 

“Bayer conducted appropriate due diligence regarding all aspects of the Monsanto acquisition, including having outside counsel conduct diligence of litigation and regulatory issues,” said a Bayer spokesperson. “The acquisition of Monsanto was carefully planned and executed and the members of the board of management and of the supervisory board have acted in accordance with their duties.”

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Pittsburgh Pension Settles Lawsuit with Molina Healthcare

Steamfitters Local 449 Pension Plan agreed to drop the case for $7.5 million.


The Steamfitters Local 449 Pension Plan of Pittsburgh has settled its securities class action lawsuit against Molina Healthcare for $7.5 million.

The lawsuit, which was filed in 2018, alleged that Molina and its senior executives misled investors regarding the scalability of its existing administrative infrastructure. The suit accused Molina executives of falsely claiming that the company could support rapid growth into existing Medicaid markets. The class period for the lawsuit was Oct. 31, 2014, through Aug. 2, 2017.

Also named in the lawsuit as individual defendants were Molina CEO Mario Molina, Chief Financial Officer (CFO) John Molina, Chief Operating Officer (COO) Terry Bayer, and Chief Information Officer Rick Hopfer.

The lawsuit accused Molina executives of lying about the company’s ability to cost effectively move into existing Medicaid markets and new Patient Protection and Affordable Care Act (ACA) health insurance marketplaces, also known as ACA Health Exchanges. It said that Molina later admitted its existing administrative infrastructure was built for a “much smaller, simpler business” and was never designed to support the company’s growth strategy.

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As a result, the lawsuit said Molina’s “failed growth strategy and inadequate administrative infrastructure” were revealed through a series of disappointing financial results, such as when, in August 2017, the company reported a quarterly net loss of $230 million, termination of its ACA Health Exchange participation in Utah and Wisconsin, and a major restructuring plan.

“Investors were led to believe that the company’s aggressive expansion and revenue growth, plus reduced costs, would drive share value, and that the anticipated growth would not require a rebuild of the company’s existing platform or a migration to an entirely new platform,” said the lawsuit.

Under the settlement, Molina Healthcare and the individual defendants deny any wrongdoing, or that they violated securities laws, and continue to deny the allegations that they made any material misstatements or omissions, that any member of the settlement class has suffered damages, or that the prices of Molina common stock were artificially inflated. However, Molina said it decided to settle after concluding that the lawsuit would be protracted, time-consuming, and expensive.

The court is set to hold a hearing to determine whether to approve the settlement on Oct. 22.

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