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Investors Fight For Class Cert. in Bayer Securities Fraud Suit


April 13, 2023

Counsel for Bayer AG investors urged a California federal judge Thursday to certify their proposed class action alleging the company downplayed litigation risks related to the weedkiller Roundup after acquiring Monsanto, arguing the shareholders’ stock-drop suit isn’t trumped by extraterritoriality concerns as claimed by the German multinational.

The proposed class includes thousands of investors who acquired Bayer securities, known as American Depositary Receipts, or ADRs, transactions that originated with the purchase of shares in Germany.

The ADRs are domestic transactions that do not raise extraterritoriality concerns, a lawyer for the investors told the court Thursday, adding that the vast majority were not new but existing ADRs bought from American brokers. The remainder — new shares — are still domestic transactions because they were transferred in the United States, at the Bank of New York Mellon, Benjamin Jackson of Cohen Milstein Sellers & Toll PLLC, who represents the investors, said.

About 83 to 87% of the shares at issue are existing ADRs, Jackson added.

“So your theory is at worst we would be excluding 15% of your proposed class,” U.S. District Judge Richard Seeborg replied. “I know you say I shouldn’t exclude the ADRs that are created for transfer.”

Jackson agreed.

“The plaintiffs in this case purchased new and existing ADRS, so even if the defendants are successful on their extraterritorial defense, our claims would survive,” Jackson said.

The lawyer for the investors also told the court that the plaintiffs have a proposed method for determining which shares are new ADRs without having to conduct class member-by-class member inquiries.

“Class actions are virtually always the fairest and most efficient way of litigating federal securities fraud claims, and this case is no exception,” Jackson said. “It’s actually a straightforward, run-of-the-mill Section 10(b) [securities fraud] case about domestic securities.”

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The investors are represented by Carol V. Gilden, Steven J. Toll, Susan G. Taylor, Joel P. Laitman, Chris Lometti and Benjamin F. Jackson of Cohen Milstein Sellers & Toll PLLC.

Read the article on Law360 (subscription required).