Bayer shares fell sharply after Washington state's top court granted a petition for review in a case over allegations of chemical contamination at a school.
The Washington Supreme Court agreed to review a decision by a state appeals court that had handed Bayer's Monsanto a legal victory in May. That ruling had overturned an initial verdict that ordered Monsanto to pay $185 million to plaintiffs who alleged they suffered injuries due to exposure to chemicals known as polychlorinated biphenyls, or PCBs.
Monsanto stopped making the product in 1977. The Washington Supreme Court also accepted review of a cross-petition filed by the company on whether punitive damages should have been awarded, a company spokesman said.
Bayer shares closed 6.8% lower on Wednesday, taking the stock's decline since the start of the year to nearly 19%.
The setback shows the challenges Bayer faces in fighting U.S. legal cases arising from its acquisition of Monsanto while trying to bring down debt and to overhaul an organization with operations spanning agriculture, pharmaceuticals and consumer-healthcare products.
Bayer's Monsanto said trial court errors identified in the May decision of the Court of Appeals are well reasoned. There is no basis for a different outcome on appeal, it said.
At the time, Monsanto called the appeals court decision a significant ruling in its favor. Shares in Bayer had closed up nearly 3% on the news.
Investors have been watching the Washington case, with analysts at Jefferies pointing to the risk of it resulting in a multi-billion dollar hit for a company that has seen its market value decline in recent years. As of Wednesday's close, Bayer had a market capitalization of about 26.77 billion euros ($29.40 billion), having shed around 37% of its value over the past year.
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