Bayer defeats Merck in lawsuit over talc liabilities

[April 04, 2023]  By Jonathan Stempel

(Reuters) -A Delaware judge on Monday dismissed Merck & Co's lawsuit seeking to hold Bayer AG responsible for more talc-related liabilities stemming from its $14.2 billion purchase of Merck's consumer care business in 2014.

Vice Chancellor Nathan Cook of the Delaware Chancery Court said the purchase agreement "clearly and unambiguously" left Merck liable for claims related to products, including Dr. Scholl's foot powder, sold before the transaction closed.

The companies face potentially billions of dollars of liability from lawsuits by consumers alleging that asbestos contained in talc-based products such as Dr. Scholl's caused cancer.

Merck claimed that its liability ended on Oct. 1, 2021, seven years after the transaction closed, and sued Bayer after the German company refused to assume liability.

But the judge called Bayer's interpretation of the purchase agreement "the only reasonable one," and said letting Merck "dump" cases would give the Rahway, New Jersey-based company an incentive to prolong or stall lawsuits.

"Nothing in the (agreement) indicates that the parties intended Bayer to assume liability for all of Merck's actions for the period during which it formulated, marketed, and sold the products" at issue, Cook wrote in a 37-page decision.

Signage is seen at the Merck & Co. headquarters in Kenilworth, New Jersey, U.S., November 13, 2021. REUTERS/Andrew Kelly

Merck said it was disappointed with the decision and planned to appeal.

Bayer welcomed the decision, saying that it expected Merck to "take full responsibility for the product claims".

"Bayer will continue to defend itself against any further efforts by Merck to avoid or improperly transfer its liabilities to Bayer," the company said in a statement.

The $14.2 billion purchase also included Merck's Claritin allergy medicine and Coppertone sunscreen lines.

Bayer separately inherited liability for litigation over whether the weedkiller Roundup causes cancer when it spent $63 billion in 2018 to buy Monsanto.

In June 2020, Bayer agreed to settle much of that litigation for $10.9 billion. As of February 2023, about 109,000 of the 154,000 claims it faced had been settled or deemed ineligible.

The case is Merck & Co v. Bayer AG, Delaware Chancery Court, No. 2021-0838.

(Reporting by Jonathan Stempel in New York; Writing by Friederike Heine; Editing by Jonathan Oatis and Stephen Coates)

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