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Bayer’s reputation does not permit period two renegotiation of the

settlement amounts.

If Bayer were subsequently to discover large

numbers of high-valuation plaintiffs with high expected probabilities of

recovery at trial, its strategy would be sorely tested.

32

As explained

above, Bayer could have reached secret settlements with high-valuation

second-period plaintiffs for amounts off the schedule.

But, if

discovered,

this

would

harm

Bayer’s

future

litigation

reputation.

The Bayer strategy also does not suffer from the problem of

defining judgment

when that

an agreement is a has arisen around

settlement and when an agreement is a

some

MFN

agreements.

For

example,

in

a

recent case one plaintiff received from the defendant after extensive

a substantially negotiations in

higher amount ($50m) the judge’s chambers

led to a “judgment” in its favor.

33

The earlier-settling plaintiffs who

had negotiated $20m settlements with MFN agreements claimed that this

outcome triggered the MFN.

The defendant argued that

not

a

“settlement”

which

triggered

the

MFN

but

rather

the outcome a ruling by

was a

judge.

34

The cerivastatin strategy does not suffer from the problem of

defining a judgment or settlement and the associated incentives that the

defendant and second-period parties have in creatively labeling agreements.

MFNs

The cerivastatin by courts and the

strategy public.

is also perceived more Bayer has been able to

positively than successfully tout

the transparency benefits of its approach. Indeed, one federal court

cited Bayer’s

2004).

While

efforts of only

in rejecting class-action certification (Langley, limited legal relevance to the certification of

31 32

Interview with George Lykos (2007). In fact, Bayer’s counsel acknowledged that the strategy would

have been plaintiff

very difficult to maintain in the face

verdicts.

Interview

with

George

Lykos

of even (2007).

a

few

large

33 While most judgments occur after formal trial, this judgment was entered by the court after both parties consented to its jurisdiction.

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