You are the owner of this article.
You have permission to edit this article.
top story

3M, others may face 'existential threat' from Charleston court verdict in chemical lawsuits

  • Updated
Attorneys for 3M leave federal court in Charleston

Attorneys walk out of U.S. District Court in Charleston on Friday, July 26, 2019, following a meeting on more than 100 lawsuits that were filed against 3M and other companies. Andrew Brown/Staff

The fortunes of an American industrial giant that developed Post-it Notes and Scotch Tape could turn in a Charleston courtroom, where 3M Co. is battling claims it contaminated the environment and polluted drinking water across the country.

The Minnesota-based company's long-term profitability may hinge on how well it defends itself from a mountain of litigation over the production of chemicals known as per-and polyfluorinated substances — PFAS for short.

For decades, 3M was the primary manufacturer of that class of substances, which were used to make commonplace items like nonstick cookware, waterproof clothing, stain-resistant carpet and grease-proof food wrappers.

The compounds were also a key ingredient in a firefighting foam that was sprayed at industrial sites, civilian airports and hundreds of military bases around the world.

It’s that product that landed 3M in U.S. District Court in Charleston.

At least 110 federal lawsuits involving the firefighting foam were consolidated here this year.

Last month, dozens of lawyers representing cities, states, individuals and water utilities in those cases packed into District Judge Richard Gergel's courtroom to begin sorting out the high-stakes litigation.

They are all seeking damages for the chemicals that leached into the ground, seeped into drinking water and entered people’s bloodstreams.

Earns 3M

3M Co., based in Maplewood, Minn., is facing mounting health and environmental lawsuits over a chemical substance it manufactured. All of the cases have been consolidated in federal court in Charleston. File/AP

3M maintains there is no evidence to prove the chemicals have ever harmed anyone, and it emphasized that it phased out production of PFAS chemicals in the early 2000s. 

But medical scientists continue to scrutinize some of the compounds for possible links to immune problems, developmental issues, thyroid disorders and kidney and testicular cancers. 

The cases involving the firefighting foam aren't the only liabilities 3M could face as a result of its decades-long use of the chemicals. The company, which was founded in 1902, also faces allegations it contaminated the environment and drinking water near several of its manufacturing sites. 

The scope of the alleged contamination is so large that it's being compared to earlier battles over asbestos, which bankrupted companies and spawned the longest-running string of litigation in U.S. history.

That reality was not lost on Gergel, who has been assigned to manage the cases in Charleston.

He told the attorneys who crowded into his courtroom last month the litigation could pose an “existential threat” to 3M and the other defendants that manufactured, marketed and sold the firefighting foam.

"Right now, we have 110 cases," Gergel said, "and if I'm reading the tea leaves right, there's a lot more coming.”

"The liability could be extraordinary," he added.

We're starting a weekly newsletter about the business stories that are shaping Charleston and South Carolina. Get ahead with us - it's free.

The attorneys for 3M have developed more than a few arguments to defend the Fortune 500 company, which is currently valued at more than $100 billion on Wall Street.

The chemical-laden foam 3M produced, the attorneys argue, may have been altered or misused.

The contamination, they assert, may have been caused by negligence on the part of military personnel and others who handled the foam during accidents and fire-training exercises.

The chemicals 3M utilized, the attorneys pointed out, were never regulated by the Environmental Protection Agency.

Even more, they claim the company should be immune from liability because it acted as a contractor for the federal government.

“We will defend with vigor our company's reputation in the court of law and in the court of public opinion,” Mike Roman, 3M’s chairman and CEO, told investors on an earnings call last month.

But not everyone is convinced those legal arguments will hold up in federal court.

"It's hard to fathom how 3M gets out of much of this," said John Inch, an investment analyst with Gordon Haskett.

Inch and his colleagues recently analyzed the growing number of lawsuits targeting 3M. They estimated the mounting litigation in Charleston could cost the company between $1.5 billion to $3.7 billion, if the verdicts begin to turn against the company.

And that doesn’t include other lawsuits that could follow in their wake. 

Inch’s estimate is based on the results of earlier litigation from West Virginia and Ohio. In that case, a DuPont plant that used PFAS chemicals to produce Teflon was sued for contaminating the drinking water of several communities along the Ohio River.

That litigation took years to sort through and involved more than 70,000 people taking part in a seven-year health study.

It has since resulted in several multimillion-dollar verdicts against DuPont and a $671 million settlement in 2017 to end roughly 3,500 other claims.

The lawsuits, Inch emphasized, are not an immediate threat to 3M. It could take years before the cases go to trial.

But the litigation, he said, could create significant uncertainty for the company in the future.

"The final bill for 3M, while perhaps unlikely to create near term financial stress, could end up substantially greater than what the markets are presently assuming,” his report said.

For now, 3M is busy preparing to turn over nearly half a century of records related to the chemicals.

Reach Andrew Brown at 843-708-1830 or follow him on Twitter @andy_ed_brown.

Get up-to-the-minute news sent straight to your device.


Breaking News

Columbia Breaking News

Greenville Breaking News

Myrtle Beach Breaking News

Aiken Breaking News