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BLOG: Why Are We Not Holding Meetings to Sign-Up Corn Farmers to Sue Syngenta?

Posted on Friday, May 15, 2015 at 11:50 AM by Daniel Lindstrom

Over the past several months I’ve been receiving calls and emails from lawyers that I know, and even more from lawyers that I’ve never heard of, all asking me to align with them in signing up my corn farmer and/or ethanol plant clients to get involved in a huge lawsuit that has been teed-up against Syngenta.  Here is an example of an email I received recently:

Dan,

Our firm is representing a number of agriculture businesses pursuing claims against Syngenta for its introduction of MIR162 corn without obtaining import approvals from China.  In researching claims on behalf of non-producer entities, we came across your firm and its substantial agriculture practice.

I would welcome the opportunity to introduce myself and discuss the possibility of working together on this litigation.  Is there a convenient time I can contact you?

Best Regards,

[Lawyer from Out of State That I Have Never Heard Of]

I have even had a few questions from clients who have received unsolicited letters or other contacts, or who have noticed newspaper and Internet advertising by law firms seeking to sign up corn farmers.  The questions range from: “Do you think I should sign up?” to “Why isn’t your firm holding corn farmer meetings like XYZ firm down the road is doing?”

Of course, it is flattering to have people locate and contact us about doing substantial legal work, and we welcome those contacts.  I have engaged in lengthy conversations with a number of the lawyers who have contacted me about the merits of the claim that they want for my ethanol and agricultural clients to pursue.  I have even made some new friends as a result of these visits.  Within the firm, we have spent considerable time discussing whether it makes sense to make our list of agricultural and ethanol clients available to these folks for purposes of soliciting them about potentially joining this huge set of lawsuits.  After much deliberation, we decided that we would not participate. 

Here is some of our rationale:

  • The case is premised on the theory that the current downturn in the price of corn in the U.S. corn market was caused by China’s rejection of U.S. corn set for export to China due to China’s stated concern about the presence of the then unapproved Syngenta genetically modified trait that might exist in that corn.
  • While China is an important trade partner for U.S. agricultural commodities, it has its own domestic corn production that it seeks to protect, it is a country that does not necessarily always play by our rules, and it can sometimes arbitrarily make decisions about whether to honor contracts with some impunity.  In the contract law world, we call this “counterparty risk.”
  • Those who wish to sue Syngenta will have, we think, significant burdens of proof that they will have to meet in order to recover anything.  In particular, they will have to present evidence to show that China’s explanation for not buying U.S. corn was actually causally connected to the Syngenta genetic trait and not merely an excuse for not wanting to buy expensive corn from the U.S. at the same time that its domestic production was particularly high.  They will also need to prove the extent of their damages claim with some amount of certainty.  This will require them to eliminate from consideration other factors that might have caused the price reduction.
  • During the relevant time period, U.S. corn markets likely began to fall in price for other reasons, such as higher production of domestic corn and lower utilization rates for that influx of corn into the marketplace.
  • China has subsequently lifted its ban on U.S. corn and now seems unconcerned about the presence of the Syngenta trait, allowing skeptics to opine that it was the reduction in the price of U.S. corn that has brought the Chinese back into the market for U.S. corn, not some change of heart about Syngenta’s genetically modified trait.
  • In the ethanol context, the majority of Nebraska ethanol producers market their distiller’s grains co-product by selling it into the local livestock industry, in many cases as a wet product that is not conditioned for the export market, so the Chinese market for dried distiller’s grains (“DDGS”) probably has little direct effect upon Nebraska distiller’s grains sales.  In other parts of the country where plants do not have the concentration of livestock on feed that we have in Nebraska, this analysis may be different.  However, on the other side of the ledger, plant profitability can be enhanced with lower corn input costs, an issue that is sure to be raised when attempting to calculate proof of damages.
  • The cost of inputs in agricultural production is already quite high.  We would expect that the costs of litigation and settlement of these claims, whether they are successful or not, will come back as extra input costs to corn farmers who already spend tremendous amounts for the seed that they buy each year.  We don’t think that this provides a long-term benefit to our corn farmer clients.

Good luck to those of you who decide to pursue a claim. If you are one of our clients, we would be happy to refer you to one of the firms that have contacted us. However, while our firm is committed to vigorously representing our clients in litigation based upon legitimate claims, we are not willing to subscribe to the “lawsuit lottery” mentality that this case seems to promote. The fervor with which some law firms have sought to simply assemble huge groups of plaintiffs in order to try to overwhelm Syngenta and force it into making a large settlement does not seem right to us. Further, advertising for some other law firm is unseemly to us. Therefore, we choose not to participate.

 

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