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Recently the Eighth Circuit Court of Appeals vacated a punitive damages award against Monsanto and BASF in a dicamba drift damage case. The decision involved a Missouri peach farmer who experienced drift damage from over-the-top off-label applications of dicamba on dicamba-resistant seeds. On appeal, the court found that the jury had not been adequately instructed on the issue of punitive damages as it related to BASF. We will have to wait and see what the jury awards on remand with the new trial related to punitive damages. The decision is in Bader Farms v. BASF Corp.
Background
Monsanto obtained deregulation of its Xtend cotton seed from USDA in 2015. The seeds are tolerant to dicamba. At the time of deregulation, dicamba was not approved for over-the-top use. Monsanto included a tag with the seed bags to remind growers that spraying dicamba over the top would violate federal law. Even with the warning label, off-label dicamba use went up and caused several complaints across the country from off-target dicamba drift damage. In 2016, USDA deregulated the Xtend soybean seed but did not approve dicamba for over-the-top use.
In late 2016, Monsanto’s lower volatility dicamba was approved, and BASF Corp’s was approved in 2017. BASF was not involved in developing dicamba-tolerant seeds but relinquished its rights in the technology to Monsanto in 2007 and was to be paid for each acre of seed that Monsanto sold.
This decision stems from a lawsuit Bader Farms filed against Monsanto and BASF for alleged damage to Bader Farms peach orchards from dicamba drift. In 2020, a jury awarded Bader Farms $15 million in actual damages and $250 million in punitive damages. The punitive damages award was later reduced to $60 million. The court nevertheless held Monsanto and BASF jointly and severally liable for the punitive damages, even though the jury instruction only discussed Monsanto for punitive damages. This appeal followed.
Jointly and Severally Liable
Before we examine the decision, I should briefly discuss what is meant by jointly and severally liable. For a group of defendants (two or more) to be jointly and severally liable, each party must be independently responsible for the injury caused. Joint liability means the defendants are liable for the total amount of harm caused. With several liability, the defendants are accountable for their share of the injury caused. With joint and several liability, the injured party can collect from one of the parties for the damage. The paying defendant can seek a contribution from the other defendant(s) based on that defendant’s respective share of the injury caused.
For example, let’s say Shannon and Ellen get into a fistfight, and Randy (a bystander) is injured during the fight. Both Shannon and Ellen would be jointly and severally liable for Randy’s injuries because those injuries arose from a fight between the other two.
Court’s Opinion
Before we discuss the court’s opinion, it is essential to remember that in a negligence case, the plaintiff must prove that the defendant caused injury and that the cause of the damage was the proximate cause of the plaintiff’s injury. Looking at our example, Randy would need to prove that the fight between Shannon and Ellen caused his injury. Then he would need to show that the damage caused by the fight was foreseeable. For example, if Shannon pushes Ellen, that causes her to hit Randy. Ellen hitting Randy causes Randy to fall and break his arm. The fight is the cause of his accident. The accident is foreseeable in that two people fighting could injure a bystander in the manner suggested.
On appeal, both Monsanto and BASF argued that Bader had failed to prove both cause and proximate cause. Looking at the cause, the court disagrees with the Monsanto and BASF arguments. The defendants argued that Bader had to point to the dicamba product manufacturer as the cause of the damage to his peach trees. The court pointed out that Bader’s actual theory of causation was that but for the dicamba-resistant seeds on the market, neighboring farmers would not have sprayed the unapproved dicamba during the growing season. Because companies selling those seeds were limited, Bader did not have to point to the seeds the neighbors used.
Turning to proximate cause, Monsanto and BASF argued that by warning growers not to use unapproved dicambas over the top of the dicamba-resistant seeds, this had broken the chain of proximate cause. Monsanto and BASF argued this warning was an intervening cause to prevent the court from finding the proximate cause. The court on appeal disagrees with this argument and does not view third-party growers not listening to the warning as enough to disrupt the chain of events. The court highlights that Monsanto had a direct relationship with the growers through licensing and technology contracts and a degree of control over the growers. The court refuses to overturn the lower court’s decision on proximate cause.
Next, Monsanto and BASF argue that the district court used the wrong standard in calculating compensatory damages. The two companies argued that the appropriate standard was the reduced market value of the property rule when looking at damages to fruit trees. The court agreed this would generally be the standard when the owner of the trees and the property is the same, but here the trees’ owner and property owner are two different people: Bader Farms, Inc. owns the trees, and Bill Bader owns the land. Therefore, the court agrees with the Baders that the jury was instructed to the proper compensatory damages standard of lost profits and not the land value.
Next, the court turns to whether Monsanto and BASF are jointly and severally liable for the damages as joint venturers and co-conspirators. Turning first to the joint venture issue, the court determines the burden to prove this is on Bader. At trial, Bader had pointed to agreements between Monsanto and BASF in developing the dicamba-resistant seeds. On appeal, the court determined that Monsanto and BASF are not operating towards a common purpose, and the agreements Bader pointed to establish that Monsanto maintained complete control over the project and when the seeds would go to market. BASF also lacked any control over the growers planting the new seeds. The joint venture claims fail on appeal based on this evidence.
The next theory for joint and several liability was that BASF and Monsanto entered into a civil conspiracy. A civil conspiracy is when the parties enter into an agreement or understanding to commit an illegal act or to use unlawful means to do something lawful. On appeal, the court agrees with Bader that the facts support the jury’s finding of a civil conspiracy. Agreements between Monsanto and BASF highlighted that the two were aware that drift damage was possible.
Finally, the court examined claims on appeal that the punitive damages were excessive. Looking at the evidence, the court agrees with Bader that nothing prevents the jury from awarding punitive damages against Monsanto and BASF. The court agrees with BASF that the trial court did not correctly instruct the jury on the punitive damages against BASF, only on punitive damages related to Monsanto. The jury should have assessed punitive damages against BASF and Monsanto separately. The court, in the end, vacates the punitive damages award and remands with instructions to hold a new trial on punitive damages.
Reference
Bader Farms v. BASF Corp., 39 F.4th 954 (8th Cir. 2022) reh'g denied sub nom. Hahn v. Monsanto Co., No. 20-3663, 2022 WL 3698378 (8th Cir. Aug. 26, 2022).