Meter is running on damages from Oregon GMO tainting event, attorney says

02-Jun-2013 - Last updated on 03-Jun-2013 at 14:43 GMT

With Japan and South Korea having placed export bans on some US wheat sources, the meter is running on potential damages from the GMO tainting incident in Oregon, said an attorney who has represented farmers in similar cases.

Adam Levitt, a consumer class action litigator with the law firm Grant & Eisenhofer in Chicago, has long experience with the market wreckage GMOs can cause when they taint crops. Levitt was the lead litigator in two landmark cases: the case against Bayer CropScience over its genetically modified rice, and the earlier StarLink corn case.

Levitt said it’s too early to say whether the Oregon incident, in which GMO wheat plants of Monsanto’s Roundup Ready variety were discovered in a farmer’s field, will cause the same kinds of damage as the earlier cases in which he was involved. But the potential losses to farmers are huge.

“The disclosure in new, with more information is coming virtually hourly,” Levitt told NutraIngredients-USA. “We don’t know the extent of it. We don’t know its overall scope. The obvious hope is that this GM wheat hasn’t poisoned the well. Unfortunately, based upon past experience, we often know how the story ends.

“If this is going to be as serious of an event as it could be, there will almost certainly be litigation,” he said.

Bayer, StarLink cases

The effects of the tainting could be far reaching, extending to export losses and increased testing and handling costs for crops even years after the incident. According to court documents in the Bayer rice case, in August 2006, the United States Department of Agriculture announced that Bayer’s genetically modified Liberty Link rice was found in the U.S. long-grain rice supply, including two of the most popular rice seed varieties, Cheniere and Clearfield 131. Discovery of the contamination led to a dramatic drop in U.S. rice prices, as the European Union stopped purchasing U.S. rice due to the contamination. Even today, the European Union’s purchases of U.S. rice are only a small fraction of what they were before the 2006 GM contamination.

Bayer eventually settled for $750 million in the case in which Levitt was co-lead litigator. Including ancillary settlements, the total Bayer agreed to pay came to about $920 million, Levitt said. The StarLink case was settled for $110 million.

Late last week Japan placed a ban on the importation of Western white wheat, which accounts for about 30% of the wheat Japan imports from the US. About 90% of the wheat grown in Oregon is classed as “soft white” wheat, of which Western white is one of the varieties. One of the fears is that other importers will follow Japan’s lead (South Korea has already done so) and other top wheat exporters—Russia, Ukraine and Australia—will capture some of the market, shares that will be difficult to recover. Late last week the import bans drove down wheat futures on the Chicago Board of Trade.

The uncertainty about GM content of crop supplies complicates the lives of not just exporters; food and dietary supplement manufacturers are trying to line up secure supply chains in order to be able to cope with potential GMO labeling requirements.

Levitt said a key point to bear in mind is that the lawsuits are about the effects of the technology, not about its merits.

“The lawsuits are not about whether GMOs are good or bad. These cases are about irresponsible handling of genetically modified events by these biotech companies. And the negagive effects it has had on American farmers and crop sytems and export markets. As we know our export partners take the GMO issue very seriously,” Levitt said.

Information gathering phase

It is still undetermined how the wheat ended up in the Oregon farmer’s field, and it may never be determined conclusively. But as there appears at this moment to be no disagreement about where the strain was developed, it may not matter. Similarly, in the Bayer rice case, the precise series of events by which the strain escaped, possibly from Bayer’s test plots in Louisiana, was never elucidated in court.

“But a whole lot of juries around the country seemed to have determined that Bayer was liable,” Levitt said.

In Oregon case, the goal now is to collect information to determine the extent of the event, Levitt said, and that goal is aided by the fact that most farmers are meticulous in their operations.

“In general, farmers are very, very good record keepers,” he said. “The goal now is to determine how it happened, why it happened, how widespread it is and what the effect will be on American wheat farmers.”

And while Levitt couldn’t speculate on the scope of a possible case, it could be big.

“I can you our phones are pretty busy. A lot of farmers and farmers’ organizations have been reaching out,” Levitt said.