Investing.com -- Shares of Bayer AG (ETR:BAYGN) surged on Friday after the company secured a significant legal victory in its ongoing battle over claims that its Roundup weed killer causes cancer, as per a Reuters report.
At 3:43 am (0743 GMT), Bayer (OTC:BAYRY) was trading 7.8% higher at €28.34.
The 3rd U.S. Circuit Court of Appeals in Philadelphia ruled in favor of Bayer, stating that federal law shields the company from liability in a lawsuit brought by a Pennsylvania landscaper, David Schaffner, who alleged that the product caused his non-Hodgkin's lymphoma, the report said.
The court's decision, delivered by Chief Judge Michael Chagares, rejected Schaffner's argument that Bayer's Monsanto (NYSE:MON) unit violated state law by failing to include a cancer warning on Roundup's label.
The ruling emphasized that the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) mandates nationwide uniformity in pesticide labeling, thus preempting individual states, like Pennsylvania, from imposing additional warning requirements.
This outcome marks a win for Bayer, which has been embroiled in extensive litigation concerning Roundup. The company's stock, which has suffered from years of litigation risk, was 2.6% higher in premarket trading on Friday at brokerage Lang & Schwarz following the court's decision.
The company stated that the decision conflicts with earlier rulings from federal appeals courts in San Francisco and Atlanta on similar issues. This conflict may increase the likelihood that the U.S. Supreme Court will step in to resolve the discrepancy, potentially reducing Bayer's liability in future cases.
Bayer has consistently maintained that Roundup and its active ingredient, glyphosate, are safe for use. The company expressed satisfaction with the appellate court's ruling, stating that the Supreme Court should "settle this important issue of law." Despite settling much of the Roundup litigation for $10.9 billion in 2020, Bayer still faces around 58,000 unresolved claims.
The Schaffners, who initially sued Bayer in 2019, settled with the company in September 2022, contingent upon Bayer's ability to convince courts that federal law preempted Pennsylvania from requiring a cancer warning on Roundup.
Following the recent ruling, the Schaffners' attorney, Chip Becker, expressed disappointment, arguing that federal law should not preempt their failure-to-warn claim. The Schaffners are reportedly reviewing their legal options in light of the decision, the report said.