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Bayer Investors Class Action Lawsuit Overview:
- Who: A federal judge mostly sided with investors who lodged a securities class action lawsuit against Bayer.
- Why: Investors claim Bayer failed to adequately take risk into account, including pending Roundup litigation, when it acquired Monsanto back in 2018.
- Where: The class action lawsuit was filed in California federal court.
Bayer will have to face a securities class action lawsuit from disgruntled investors after a federal judge denied the company’s request for dismissal earlier this week.
The City Of Grand Rapids General Retirement System and the Michigan city’s Police & Fire Retirement System filed the class action lawsuit last year, arguing Bayer failed to do its “due diligence” when it acquired Monsanto back in 2018.
Monsanto is the creator of the Roundup, which is at the center of more than 125,000 claims that are currently in multidistrict litigation over allegations the weedkiller causes Hodgkin’s lymphoma.
The pension funds allege Bayer misled investors about the severity of litigation it was taking on by acquiring the company and that the purchase has artificially inflated stock prices while failing to benefit stockholders.
Bayer Downplayed Roundup Lawsuits, Inflating Stock, Says Class Action
The federal judge overseeing the case mostly took the side of investors, ruling they had successfully pled loss causation by showing Bayer’s exposure to the Roundup litigation was more than it portrayed.
The judge also ruled the investors successfully argued falsity and pleaded scienter by showing Bayer had a motive for making allegedly false and misleading statements about the acquisition of Monsanto.
“Bayer and its executives desired to remain competitive in the agrochemical business by acquiring Monsanto, despite serious risks associated with the merger,” the judge wrote. “Although this motive is not dispositive, the statements in conjunction with the motive adequately plead scienter.”
Bayer has maintained that it did its due diligence before acquiring the embattled agrochemical company, and the judge did agree that even a failure to do so would not in itself constitute a securities fraud claim.
However, the judge ruled that investors had done more than just show that Bayer had not done a good enough job of vetting the company.
“Defendants’ statements concerning its due diligence could have [given the impression] … that Bayer had assessed Monsanto’s litigation risks, and had reviewed non-public information to inform that review,” the judge wrote.
The judge also took the side of investors in ruling they adequately pleaded a material misstatement regarding the dangers of Roundup compared to glyphosate, by showing Monsanto knew Roundup might have been more dangerous than just its active ingredient.
In defense of Bayer, the judge ruled investors failed to plead falsity concerning claims the company did not adequately take legal risks into account before acquiring Monsanto.
Investors also failed to support their claim that Bayer acted with deceit or that it falsely represented studies regarding the connection between glyphosate and cancer, the judge said.
To see if you qualify for a Roundup lawsuit click here (links to paid attorney advertisement).
The plaintiffs are represented by Carol V. Gilden, Steven J. Toll, Susan G. Taylor, Joel P. Laitman, Chris Lometti and Benjamin F. Jackson of Cohen Milstein Sellers & Toll PLLC.
The Bayer Investor Class Action Lawsuit is Sheet Metal Workers National Pension Fund, et al. v. Bayer Aktiengesellschaft, et al., Case No. 3:20-cv-04737, in the U.S. District Court for the Northern District of California.
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