Mosquito or ICBM? A Class Action Targeting Monsanto
Has Big Ambitions
By David Rubenstein
Corporate Legal Times, January 2001
The poor plaintiffs' lawyer just can't win. If he takes a case with a big payoff, he's greedy. If he
takes a case without much chance for success, he's political.
At this point it's hard to tell what kind of rascal Monsanto Co. is up against in George
Higginbotham, et al v. Monsanto Co. But the agricultural giant clearly is pushing the notion that
it's the latter, and that this case is a political and public relations exercise wrapped around a
hopeless lawsuit.
If so, it could still be a problem for Monsanto-if all the interesting information does not remain
sealed. The lead plaintiff firm, Cohen, Milstein, Hausfeld & Toll, is well-known and wellconnected, internationally as well as domestically. It's sure to gather a lot of ammunition for
Monsanto's critics. Genetic engineering has many detractors, but so far they haven't had much
success translating their criticisms into a court case. A lawsuit against the FDA-alleging that its
failure to require products containing genetically engineered ingredients to be labeled as suchwas thrown out of court in October.
Organic growers fear a Monsanto corn seed that genetically incorporates a pesticide known as Bt
will breed resistant insects which will eventually make Bt ineffective. Monsanto, a wholly-owned
subsidiary of Peapack, N.J.-based Pharmacia Corp., presumably would have other products in
the wings by the time Bt was obsolete. But that probably wouldn't solve the problem created for
organic farmers: Bt is a naturally occurring pesticide produced by a soil bacterium known as
bacillus thuringiensis and is one of the few pesticides that are approved for strict organic
production. But organic farmers haven't taken their case to the courts ["Growing Agro-Biotech
Business Fuels Patent Battles," February 1999, p. 30].
Other critics have argued for years that the mission of the land-grant colleges has been
subverted, first by agribusiness and now specifically by the genetic-engineering companies. But
that's a critique, not a complaint.
And some environmentalists and agronomists have raised the specter of genetic drift sullying the
crops of conventional farmers and even the world's natural germ plasm centers. These are the
broad geographical areas-for wheat, it's an area from Syria east to the Caucasus; for potatoes,
the Andes-that serve as repositories of ancient genetic diversity in wild plants that can be tapped
by breeders for traits such as drought or disease resistance.
Now all of these criticisms and more have been wrapped up in one big lawsuit. The suit is
couched partly as an antitrust action and partly as a suit under common law, with consumer fraud
and deceptive business practices claims. It also alleges violation of "customary international law."
Cohen, Milstein has emerged as probably the most effective class-action firm in the country for
lawsuits with a strong social and political component. They seem to be everywhere these days,
suing gun manufacturers on behalf of municipalities and Bridgestone/Firestone Inc. and Ford
Motor Co. on behalf of The Center for Auto Safety, among others. In recent years, Cohen,
Milstein made headlines with a $ 125 billion settlement on behalf of Holocaust survivors against
some Swiss banks, and for work that resulted in a multimillion-dollar settlement against Exxon for
Native Americans who suffered damage from the Exxon Valdez oil spill.
Firm Chairman Michael D. Hausfeld isn't even sure how many class-actions cases the firm is
currently handling. "Probably 40 or 50," he says.
In the Higgenbotham case, the hoped-for class of plaintiffs is huge: virtually every corn and
soybean farmer in the world.
The suit actually alleges three classes. Two are in the United states: corn or soybean farmers
who use Monsanto's genetically modified products, and corn and soybean farmers who don't use
Monsanto's modified products. A third class consists of corn and soybean farmers in the rest of
the world, both those who did and did not purchase Monsanto genetically modified products
within certain specified dates. The complaint asks for damages for the U.S. farmers and injunctive
relief for farmers abroad.
The non-users complaint is based on alleged loss of consumer faith in U.S. product because the
modified and non-modified get mixed up in the processing and distribution chain. Thus, even the
purists' product suffers.
The allegations in the suit manage to invoke most of what critics have been saying for years are
the problems or potential problems with genetically modified seed products. At the same time, the
suit lays out a three-count antitrust case, accusing Monsanto of attempting to monopolize the
United States modified corn and soybean seed markets and of conspiring to fix prices and
restrain trade in those markets.
This is "an exercise in legerdemain," according to the brief in support of Monsanto's motion to
dismiss. The "highly publicized, sprawling 64-page amended complaint contains a mass of
accusations, characterizations, opinions, legal theories, alarmist rhetoric, press accounts and
unsubstantiated conclusions." Yet, says Monsanto, the complaint "fails to state a single claim
upon which relief can be granted."
According to a source familiar with the full range of Monsanto's legal problems, this would-be
class action is nothing but a publicity stunt, instigated by a gaggle of fringe critics, notably the
well-known genetic-engineering critic Jeremy Rifkin. As a legal threat, this case is dwarfed by a
number of high-stakes intellectual property disputes in which the company is embroiled, says the
source, who asked to remain anonymous.
In a press release issued by Monsanto, Assistant General Counsel David Snively calls the case
"another in a series of unsuccessful attempts by veteran antagonists to stop a technology with the
potential to improve our environment, increase food production and improve health."
Snively has also accused the lawyers for the case of embracing bad science and using the legal
process to make a political statement. According to a source at Monsanto, the real interest of the
plaintiffs, and its tepid interest in actually winning a court case, is evidenced by the fact they have
a third-year associate working on the case.
Hausfeld says he got interested in the case "because I had a lunch with Rifkin," but after that the
firm conducted its own independent research.
According to Hausfeld, the lead attorney on the case is Richard S. Lewis, a partner. But questions
about the substance of the case were referred to Elisabeth H. Cronise, who is an associate at
Cohen, Milstein. According to Cronise, Rifkin has no involvement with the ongoing case.
Hausfeld says the firm is in the case to win, and it considers damages a possibility. He declines to
speculate on possible figures. He also acknowledges what critics might consider a political
interest.
"We don't bring cases because they are just big, or because they involve a lot of money," he
says. "We bring them after we investigate them because we think they are important."
PATENT AS MONOPOLY
Although plaintiffs "colorfully" characterize Monsanto and some of its licensees as a cartel,
Monsanto's actions are nothing more than typical lawful practices of a patent holder, according to
Monsanto.
In support of its motion to dismiss, Monsanto argues that patent rights preclude antitrust claims. It
characterizes a patent as essentially a right to a monopoly, albeit a temporary one, granted for
certain reasons that have been deemed socially beneficial. Thus, as long as the patent is
operative, an antitrust case is precluded.
The prices that Monsanto charges for its modified seeds, characterized by the plaintiffs as
"supercompetitive," do not exceed the limits of what a patent holder can charge, according to
Monsanto, because no such limits exist. During the 17-year period of the patent, the patent holder
can charge what it wants and garner whatever license fees it can, the company says.
Quoting precedent, Monsanto argues this is core of the patentee's rights and is a legitimate
award of "the patent monopoly," and so the notion of an excessive royalty rate or licensing fee is
legally meaningless.
But according to Cronise, the question of whether Monsanto's actions are protected by patent
laws is one for the court, and there is ample precedent to conclude it is not.
"The argument Monsanto makes-that if they have the patent, they are not subject to any antitrust
liability for whatever they do with that patented product-is simply not the state of the law today,"
she says.
Cohen, Milstein filed the Higginbotham case in Washington, D.C., in December of 1999. A similar
case, Blades, et al v. Monsanto, was filed in the Southern District of Illinois in February of 2000.
The cases were consolidated, and plaintiffs' attorneys from both cases are on the case, with
Cohen, Milstein as the lead firm.
There is also a third case, one that could prove a blessing in disguise for Monsanto. That case,
Massey, et al v. Monsanto et al, was filed in federal court in Mississippi in November of 1999. The
plaintiff, a Coahoma County, Miss., farmer who had purchased Roundup Ready soybean seeds,
alleged antitrust and RICO violations, as well negligence, fraud and deceit, breach of implied
warranty of merchantability, and breach of implied duty of good faith and fair dealing.
Monsanto argued that this case was in essence a contract dispute between Monsanto and a
grower, arising out of the technology agreement that Massey signed when he purchased the
seed. Consequently, according to Monsanto, it was empowered to invoke a forum-selection
clause in the contract. That clause designates the U.S. District Court for the Eastern District of
Missouri, Eastern Division (or state court in St. Louis County), as the exclusive forums to hear all
disputes arising out of the technology agreement.
The U.S. District Court for the Eastern District of Missouri, Eastern Division, is in St. Louis,
Monsanto's corporate home. The judge agreed with Monsanto, and in June the case was
transferred to St. Louis.
So now there are two venues and what were three cases: Higginbotham, Blades and Massey.
Higginbotham and Blades have been consolidated in the Southern District of Illinois. The Massey
case, its scope radically diminished, is in the Eastern District of Missouri, and Monsanto would
very much like to get Higginbotham there, too, if it doesn't succeed in getting it dismissed.
Cronise maintains it would not be appropriate to transfer the Cohen, Milstein case to St. Louis.
"The heart of this case is not a contract dispute. This is an antitrust case and an environmental
case. The contract is only one small element of the antitrust case."
Moreover, according to Cronise, the Massey case itself has been transformed as the result of a
motion by the plaintiffs' attorney and granted by the court, from a wide-ranging antitrust and
environmental case to a simple defective-product claim.
By early October, according to Hausfeld, a vast amount of information had been obtained through
discovery, most of which would remain sealed during the trail.
But ironically, the firm didn't need discovery to obtain an important document that appears in its
complaint: Monsanto's 1996 "Maize Protection Plan."
"It was admitted into evidence before, in litigation between Monsanto and one of its coconspirators," says Cronise.
According to the complaint, the Monsanto plan "outlined a strategy to monopolize and restrain
trade in the genetically modified seed market by licensing both YieldGard and Roundup Ready
technologies to independent seed companies that would otherwise be competitors of both
Monsanto and each other."
The allegations that most reflect the arguments of the activist critics are those that invoke a failure
to adequately test products which have a potential to disrupt existing ecosystems. But according
to Hausfeld, the allegations in this lawsuit are far short of a wholesale indictment of the industry.
"We are not saying that genetic engineering should never occur, or that it will never produce
products that could be extremely beneficial," he says. "What we have said is that when you
genetically engineer a basic food product, it should be sufficiently tested to determine by the best
available science at the time that there is no foreseeable risk. Clearly that was not done with corn
and soy beans."
Monsanto argues that its products met U.S. regulatory requirements, and that plaintiffs don't try to
claim otherwise. Instead, according to Monsanto, they imply some higher standard without
specifying what it is or "what, precisely, this Court should require Monsanto to do."
The motion to dismiss is scathing. The plaintiffs "concoct failure-to-test claims and denominate
them in terms of public nuisance, consumer fraud, breach of warranty (a contract claim, and
formless, unrecognized concepts of customary international law-all surrogate for the negligence
claim they cannot bring," it reads.
"This is an exercise in legerdemain, and obviously is designed to hide the gaping holes in
plaintiffs' allegations. As a matter of fact, plaintiffs cannot allege that Monsanto's testing has fallen
short of any standards imposed by statutory, tort or contract law, or that Monsanto's products
have injured anyone. In short, no breach of any legal duty has occurred which has caused injury
to a single plaintiff."