Reuters | August 20, 2003

Three companies led by Monsanto Co. MON.N agreed yesterday to a $700 million settlement of two Alabama court cases involving thousands of plaintiffs who charged that their homes and lives were damaged by PCB contamination, plaintiffs' attorneys said.

Under the settlement, which also includes Solutia Inc. SOI.N and Pfizer Inc. PFE.N unit Pharmacia, Monsanto and Solutia will pay the damages and fund community improvement programs to end the state and federal cases that involved more than 20,000 current and former residents of Anniston, Alabama, according to an announcement from law firm Shelby Roden and Cartee, which represented some plaintiffs.

The problems arose decades ago when the former Monsanto Co. conglomerate of pharmaceutical, chemical and agrochemical interests operated a chemical plant in Anniston that made polychlorinated biphenyls, or PCBs.

The plaintiffs' attorneys said they had uncovered internal company documents dating back to the 1930s that revealed Monsanto was aware of the health hazards of PCBs for decades and failed to warn of the hazards.

Plaintiffs' attorneys had estimated awards could total $3 billion.

The settlement comes just days after St. Louis, Missouri-based Solutia said it was close to having to file for bankruptcy protection because of the costs of the litigation.

Monsanto has been eager to settle the litigation as it is next in line after Solutia to take on the legal liabilities. In an agreement earlier this month with Solutia, Monsanto took over responsibility from Solutia for settling the cases. 

Solutia was severed from the former Monsanto conglomerate in 1997, and assumed liability for PCB-related litigation, some retiree benefits and environmental cleanup costs. Monsanto merged with Pharmacia & Upjohn in 2000 to become Pharmacia Corp. The agricultural business of Monsanto was later spun off into a fully owned subsidiary, the "new" Monsanto Co., which Pharmacia divested last year.

In a statement, Monsanto said that under the settlement agreement it would pay about $390 million in cash, while Solutia would pay $50 million "over time" and commercial insurance would provide about $160 million. It said Solutia and Pharmacia would also participate in an array of community initiatives. 

"Including the effect of this settlement, Monsanto management now expects to generate free cash flow in the 2003 calendar year in the range of $50 million to $100 million, as compared with the original target of $350 million to $400 million," Monsanto said.

In the court cases, Anniston residents alleged that the former Monsanto company dumped millions of pounds of dangerous chemicals into creeks and rivers around the town, and into exposed landfill areas, while keeping the danger hidden from area residents.

The plaintiffs said thousands of children developed cancer, cerebral palsy and other problems because of exposure to the PCBs.

PCBS are man-made fire-resistant chemicals once used as electrical fluids. Monsanto stopped producing them in Anniston in 1971 amid mounting evidence of environmental problems. PCBs were banned by the federal government in 1979. 

In their defense of the lawsuits, Monsanto and Solutia argued there was no evidence that the PCBs caused the health problems of people in the area, and they have said they spent about $54 million to clean up the area.

Solutia officials said they and Monsanto are continuing to pursue litigation seeking reimbursement for some of the cleanup work from foundries that operated in the region and contributed to the contamination.

In the state-level case, the companies had already been found liable for about $100 million in property damage. Personal injury claims on top of the property damage were still being determined.

The settlement calls for funding of an environmental-medical clinic and research facility in Anniston as well as free prescription medicines and health screenings, as well as cash compensation for victims and various clean-up measures.