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Comment by dylan604 | Hacker News Reader

Waiting for upcoming news about Monsanto spinning off the Roundup division into a new company that suddenly files for bankruptcy.

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Monsanto hasn't been a separate company for years: Bayer bought them out for 63 billion in 2018: A coup for the Monsanto CEO, as Bayer's total market cap today is 34 billion, and that includes all the pharma and chemical work too, not just crop science.

When they were independent, their legal team had a very successful track record, but I am told the majority of them just retired with the very large windfall they got out of that merger. Given that Bayer has a different CEO than when the merger occurred, it'd not be crazy if Bayer jettisoned all of crop science away. For all the concerns about Roundup, I'd expect the Dicamba legal risks to weigh down the value of keeping crop science at all.

It might not be remembered as as silly a merger as AOL acquiring Time Warner, but it's close.

They had a good track record in court when they were American. As soon as a foreign company bought them, juries found an appetite to convict and impose freakishly large damages.

The difference in value in the stock market between tech corps and other industries is so absurd. I know it's based on the value each company can extract, not on their actual critical value of what they produce, so it makes total sense, but I believe this total disconnection between the stock market goal and "people/society" goal is part of why so many feel disenfranchised and disconnected from "the economy".

Why are they down so much?

The Roundup lawsuits are a factor. One of their largest products is an albatross.

It's only 2.5 bill. In the grand scheme, not that much. Or, are you saying that product line now goes to zero? I don't know how much they are making out of that line.

what is to stop the law firm from doing it again in another state?

It does stretch credibility that this kind of thing wasn't discovered during due diligence of the acquisition.

They didn’t expect to lose these cases. They think the scientific facts are in their favor.

I assume this comment is a reference to Purdue Pharma preemptively filing for bankrupcy after losing a bunch of lawsuits due to the (surely!) criminal way in which they--and the Sackler family that owns it--sold opiods.

However, as much as I hate the Sacklers, I have to pipe in here out of a respect for the truth (Gell-Mann Amnesia style).

The Purdue bankruptcy was not some sort of Machiavellian "get out of jail free" card. Rather, it is what is normally done when there are so many lawsuits on a company that it is likely they exceed the value of the company itself.

Everyone who sues and wins against Purdue will become a creditor of the company. But they will be owed much more than the company is worth. So who should get paid? The first person to sue? The last? The one worst off?

Parceling out the assets of a company among its creditors is the job of a bankruptcy court, and that is why Purdue declared bankruptcy preemptively. Not to screw over the creditors, but rather to protect them so that a judge can decide who gets what.

This is standard operating procedure when a company believes there are more creditors than it can pay, even if the creditors have not filed suit yet.

There are certainly horrible things about the way Purdue has been handled—chiefly among them that the members of the Purdue family are not being criminally prosecuted—but the whole bankruptcy thing is not one of them.

I would suggest reading Matt Levine's analyis of the whole debacle, both "The purdue bankruptcy didn't work (2021)" [0] and the follow up "Purdue Pharma's Bankruptcy works now (2023)" [1]

[0]: https://archive.is/BNzqi [1]: https://archive.is/lScV9

Isn't the issue not that Purdue declared bankruptcy, but that the Sacklers avoided any personal payment?

> I assume this comment is a reference to Purdue Pharma

sure, assume away. I was thinking more of J&J's talc=>asbestos, Alex Jones, and all of the other cases. It's not like the Sacklers are original thinkers. Some of us have memories longer than goldfishes

The J&J case is one of the most famous examples of "Texas two-step" bankruptcy, but I didn't know until now that there have only been four companies that used this strategy (all represented by the same law firm).

https://en.wikipedia.org/wiki/Texas_two-step_bankruptcy

I was thinking of Dow/DuPont's Bhopal subsidiary [0]

0: https://www.independent.co.uk/news/business/news/bhopal-disa...

More likely Monsanto appeals and the damages get much smaller. Juries like to award much larger sums than judges.

Indeed. 250 million compensation + 2 billion punitive is an immense amount of money.

The median wrongful death settlement in California is between $250,000 and $500,000, and the average payout for car accident deaths in the United States is around $1.5 million.

I dont really understand the criteria around what counts as liability for a defective product.

Cars and guns routinely kill people, but are useful tools. Roundup or baby powder kills someone in unintuitive and statistically remote ways, and you have multi-billion dollar settlements.

It usually has something to do with willfully hiding evidence that the product is inherently unsafe and avoiding safety protocols that would save lives. The canonical case in my mind is the Ford Pinto. They knew the flaws in the design existed but valued the cost to fix them greater than the societal cost of deaths caused by the flaws. You find these in a lot of cases like this, big tobacco, Johnson and Johnson, Purdue, etc, often have essentially evil knowing decisions to hide safety issues with their product.

Cars (and to a lesser degree guns) are pretty well regulated and basically as long as you follow the spirit of the regulations and engage above board with regulators you’ll be ok. It’s a mutually agreed upon risk management between the public and the companies. There are definitely cases where a danger is known and thought acceptable and the law or regulation shifts, and you’re protected to some degree as long as you were in compliance and weren’t hiding an otherwise unknown risk. Likewise there are things you discover later and as long as you act on it in a forthright way you’re ok.

But risk management isn’t about avoiding all risks. It’s about balance, and being rigorously transparent.

How many years after the merger with Bayer can the merger be rolled back because of hidden evidence and the enormous damages?

IANAL but punitive damages are meant to punish defendants to force them to reform and deter future misconduct. They're supposed to be outrageously large, otherwise they're toothless. It's kind of the grand bargain in liability law in the US - fewer regulators and regulations but courts can hand down punishing rulings.

In a car or gun based wrongful death lawsuit, usually the defendant is the user not the manufacturer so punishing them with a $100 million ruling doesn't do anything - a $1.5 million ruling is already life changing unless they've got bulletproof liability insurance. They usually don't have anywhere near that kind of money and a ruling against them won't prevent future users from shooting or hitting someone with a car, whereas corporations are (ostensibly) able to make proper long term risk calculations.

This makes me think of the Oberlin College judgment. The jury awarded more than the law allowed to Gibson's bakery, so the $44 million dollar judgment was cut by the judge to $25.

Obviously, both Monsanto and Purdue are in a whole different class and scale of harm, but the law can and does cap damages. I don't know why the limits weren't made plain to the jurors, as it just drug out the procedure.

https://en.m.wikipedia.org/wiki/Gibson's_Bakery_v._Oberlin_C...

Reduced to $25 million, to be clear.

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