by Sam Eifling on Monday, Jun. 7, 2010 12:00 am
Attorney Charles Schlumberger, of Little Rock, helped secure a $5.8 million judgment from Bayer on behalf of Riviana Foods.
The what, where and when are known. The contamination of the American rice supply by a genetically modified long grain rice by a company since bought by Bayer CropScience occurred during tests from 1998 to 2001 in Louisiana. What's not known is the how: The method of escape by these herbicide-resistant rice plants is still unclear.
The fallout from that contamination, though, has been colossal. A seed tinkerer told Bayer he'd found plants resistant to its Liberty herbicide; the German company and the U.S. Department of Agriculture determined that seeds from Bayer's experimental Liberty Link Rice 601 had made their way into the gene pool; and the European Union, which has a strong aversion to genetically modified rice, put an emergency stoppage on imports from the United States, the world's largest rice exporter.
The rice is presumably safe to eat. But Europe's tastes and food standards crashed that market for rice - only this spring, nearly four years after the contamination was discovered, did it begin to lift its emergency protection measures. So far four juries in so-called bellwether cases have found Bayer at fault for the damages rice growers have felt since. And with thousands of cases still pending, and millions being awarded, plaintiffs' attorneys hope the litigation changes the behavior of large multinational agricultural corporations.
Meanwhile, the farmers just hope the lawyers don't end up with all the money.
Don Downing, an attorney and principal at Gray Ritter & Graham in St. Louis, who was appointed lead co-counsel in the multidistrict litigation meant to centralize discovery and pre-trial work for the thousands of cases brought against Bayer, said the damage to American rice producers will eventually reach into the billions as U.S. companies work to recover the European market share they've now ceded to countries such as Thailand, Pakistan and Uruguay.
"American rice farmers and the industry have spent literally decades building up a reputation for purity of their rice, and that went away overnight," Downing said. "Every bushel of rice that's been sold since 2006 has been sold for less than it would have been sold for. Bayer's responsible for that, and that's what juries have been finding."
Little Rock law firm Quattlebaum Grooms Tull & Burrow PLLC settled a bellwether case against Bayer on behalf of Riviana Foods of Houston for $5.8 million. Riviana delivered tainted rice to Europe through its sister companies in England, Germany, France and Belgium, and now faces suits from its European clients. Charles Schlumberger, an attorney on the Riviana case, said the blow that American rice took from the contamination persists in the "lost market" that is Europe.
"It's a very difficult thing to overcome - not only do you have to get government acceptance, you also have to get the consumer's acceptance," Schlumberger said. "Unlike the BP oil spill, theoretically that well can be plugged. You can't plug a leak once a genetically modified product gets out. You just have to wait for new generations of rice seed to come along that you're assured have not been contaminated."
A $48 Million Award
The news in April that a Lonoke County Circuit Court jury found Bayer responsible for $5.9 million in compensatory and $42 million in punitive damages to a dozen Lonoke County rice growers was cause for optimism for plaintiffs and other rice farmers. The jury, which hailed largely from around conservative Cabot, needed about two hours to find in favor of the growers.
"Farmers pretty much tend to their business and go about their business day in and day out," said Scott A. Powell, an attorney with Hare Wynn Newell & Newton LLP in Birmingham, Ala., and the lead counsel for the plaintiffs in the case tried in Lonoke. "They don't draw a line in the sand when they've been wronged. This is a different reaction, and with good reason. It's not a reaction of a handful of farmers."
Farmers know to take court awards with a long grain of salt, said Harvey Howington, vice president of the Arkansas Rice Growers Association, an advocacy group that represents farmers in every rice-farming county in the state. But even he was feeling optimistic. "It's a little unusual for these suits to come out in farmers' favor, especially in federal court," Howington said. "The reason big corporations like to get the little guy in federal court is that he generally gets his ass kicked, and it takes a lot of money to appeal. If you lose the first round in federal court, you're basically toast."
Howington remembers the announcement by the USDA on Aug. 18, 2006, that the rice has been tainted as a nightmare. Word of the contamination came just at the beginning of harvest, when prices tend to spike, and shocked the mills to a virtual standstill. He said he lost nearly $40,000 in sales in two days.
"It was perfectly timed to shoot us in the head," said Howington, whose own rice farm is in Poinsett County. "We went from very optimistic to 'Am I going to be able to sell my crop? Is it going to be worthless?' People quit taking bids. Typically you call up the grain elevator and say, 'What's your bid on rice today?' [Instead] you call them up and they say, 'We're not buying any rice.' It was terrifying."
So while Howington believes growers ought to strongly consider hiring an attorney, given juries' consistent findings against Bayer, in the past he has also been party to class-action lawsuits (which the Bayer suits are not) that didn't exactly result in life-changing payouts. The most he has ever received, he said, was a gift card to Wal-Mart after the conclusion of a crop insurance suit.
"In farmerland, we'll believe it when the check shows up in the mail," Howington said. "That's just the way it is. We get screwed, the lawyers get paid, and we get at most a $50 Wal-Mart gift card. ... The early returns are good but I'm not planning any vacations or looking at yachts."
The Rice Culture
The furor over the contamination, curiously, has little to do with the quality of the resulting rice. "You can't see it; you can't taste it; you can't smell it," Schlumberger said. "You can't even hear it. It snap, crackles and pops just the same." For any practical purpose, the rice, which is milled and shipped in batches that combine grain from many farms at a time, is indistinguishable without testing it - a process that destroys the samples themselves.
Even in the finicky European and Japanese markets, most genetically modified crops - corn, cotton, soybeans - pass muster. The difference is in rice's dietary role. The crop supplies 20 percent of the world's caloric intake, and is consumed almost exclusively by people.
"Typically soybeans and corn are fed to livestock," said Paul Byrd, an attorney in the Little Rock office of Hare Wynn Newell & Newton LLP. "But rice goes on your plate. It's a direct food, and that's the difference in the mindset."
A herbicide-resistant genetically modified rice, attorneys said, would soon be as ubiquitous as genetically modified corn and beans if only it were as valuable on the international market. That, of course, would require a sea change in consumers' attitudes and in regulations - what Bayer CropScience spokesman Greg Coffey called "market acceptance" in an e-mailed statement.
Until then, the litigators expect that not only Bayer but other chemical companies such as Monsanto and Syngenta will take heed of the fallout from the suits.
"I do really truly believe in the therapeutic value of the judicial system," Powell said. "It's no mystery that if the farmers had rolled over and said this is just one of those things that happens, then I don't think there's anybody that would credibly believe that Bayer would work overtime on their next experiment to ensure this wouldn't happen."
Said Downing: "We hope that Bayer is getting the message that if they're going to do this, you have to be careful. The message is not that farmers don't want G.M.O. [genetically modified organism] products. The farmers aren't anti-G.M.O."
The next suit in the series of bellwether trials, this one involving farmers from Louisiana, begins June 21 in St. Louis. Some Texas farmers are due to receive their day in court in October. At that point, the thinking goes, the thousands of other aggrieved parties will have a baseline from which to work out their financial claims directly with Bayer.
Coffey, the Bayer spokesman, said the company hasn't ruled out settlements. "Bayer CropScience is willing to work with those parties who approach discussions of economic loss in the genetically modified rice matter with a reasonable frame of reference," he said.
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