3M May Settle $5 Billion Scotchgard Suit as Trial Abruptly Halts
3M Faces New Cancer Claims as Minnesota Scotchgard Trial Begins
(Bloomberg) -- 3M Co. may be poised to settle a lawsuit with Minnesota that sought $5 billion over pollution from former Scotchgard ingredients after a trial was abruptly halted.
The jury trial, which had been scheduled to run at least four weeks, came to a halt Tuesday morning with an announcement pending. The case is the culmination of a 2010 lawsuit in which Minnesota State Attorney General Lori Swanson alleged natural resource damages from a former Scotchgard ingredient. The suit took a turn in November, when Minnesota said it had found cancer and premature births outside Minneapolis and would seek punitive damages. 3M and a state study released on the eve of trial have said there is no health problem.
The halt to jury selection could signify a settlement, and one on favorable terms to 3M, said Susquehanna International Group litigation analyst Tom Claps in a research note. In an earlier report about the trial, Claps has estimated $200 million to $800 million in damages from the issue for 3M. The company’s shares fell 0.5 percent to $235.56 at 2:33 p.m. in New York after falling as much as 1 percent earlier.
Spokesmen for 3M and Minnesota didn’t return calls for comment.
Controversy is growing over the main chemicals involved, PFOS and PFOA, as well as the entire class of perfluorinated compounds -- or PFCs -- which are still used in stainproof and waterproof treatments and food packaging. The trial tests a state’s ability to force a major employer to pay for pollution as the U.S. relaxes environmental rules. It also shows how liability can mushroom long after companies stop making chemicals like PFCs that don’t degrade, but accumulate in the food chain.
3M has also been sued by people, towns and water districts across the U.S., with claims the chemicals got into drinking water from sites like air force bases where they were used in firefighting foams, and in one case, a tannery where they were used to treat leather.
3M, best known for Post-It notes, dumped chemicals at sites near Minneapolis for more than 40 years -- allowing them to get into wildlife and drinking water, Swanson claims. The company knew the chemicals were harmful, but concealed the effects from regulators and distorted science on them, according to the lawsuit. It’s the biggest amount sought yet in growing lawsuits over the chemicals known as PFCs.
3M denies the claims, saying the chemicals aren’t a health risk at current exposures. It hasn’t found adverse effects among its employees, who are exposed at higher levels than the general population, 3M says. The company announced a phase-out of PFOA and PFOS -- chemicals commonly used in nonstick applications such as Teflon -- in 2000, around the same time as reports emerged that they were being found in most humans, including babies, and remote animals like polar bears.
It’s unusual to see a natural-resources suit raise human health issues, said Karen Bradshaw, an associate professor at Arizona State University who tracks such litigation.
"States are becoming more aggressive on natural-resources claims," Bradshaw said in a phone interview, adding that past results show they’re often lenient when they actually settle such claims.
New Findings
As 3M’s case progressed -- at one point taking a four-year detour when the company sought to disqualify Minnesota’s counsel Covington & Burling because it had once represented 3M on the chemicals’ use in microwave popcorn bags -- science has advanced. In 2012, the results of a massive study of 80,000 people who sought to sue DuPont over PFOA were released, establishing links to cancers, ulcerative colitis and other health issues.
New reports on the health of Minnesota-area residents will be a centerpiece of the trial, and have pitted Swanson against the state’s own health department.
Minnesota says its expert report shows higher rates of cancers, leukemia, premature births and lower fertility in the suburbs east of St. Paul prior to 2006, when there were particularly high amounts of the chemicals in municipal water.
But a week before the trial, Minnesota’s Department of Health came out with a report that said it didn’t find unusual rates of cancers or adverse birth outcomes. Swanson shot back claiming the report was rushed and risked embarrassing the department.
‘Power Abuse’
William A. Brewer III, a 3M lawyer, said in a past statement that the lawsuit is an "abuse of power" by Swanson. “The case is based on the mistaken belief that the mere presence of these chemicals presents harm to human health and the environment,” he said.
DuPont, which spun off the PFC business line as Chemours Co. and merged into DowDuPont Inc., has faced lawsuits and regulatory actions related to the chemicals, as well as a current Teflon agent. In February last year, the companies agreed to pay $670.7 million to settle about 3,550 personal-injury lawsuits.
The case is Minnesota v. 3M, 27-cv-10-28862, County of Hennepin, District Court.
To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net.
To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Joe Schneider
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