3M 2004 Annual Report Download - page 35

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Item 3. Legal Proceedings.
The Company and some of its subsidiaries are involved in numerous claims and lawsuits, principally in the United
States, and regulatory proceedings worldwide. These include various products liability (involving products that the
Company now or formerly manufactured and sold), intellectual property, and commercial claims and lawsuits,
including those brought under the antitrust laws, and environmental proceedings. The following sections first
describe the significant legal proceedings in which the Company is involved, and then describe the liabilities and
associated insurance receivables the Company has accrued relating to its significant legal proceedings. Unless
otherwise stated, the Company is vigorously defending all such litigation.
Antitrust Litigation
As previously reported, LePage’s Inc., a transparent tape competitor of 3M, filed a lawsuit against the Company in
June 1997 alleging that certain marketing practices of the Company constituted unlawful monopolization under the
antitrust laws. As a result of an appeals court ruling, 3M recorded a charge of $93 million (pre-tax) in the first
quarter of 2003. On June 30, 2004, the Supreme Court denied 3M’s petition to review the appeals court ruling,
which concluded the LePage’s lawsuit against 3M. The Company paid LePage’s $96.5 million for the judgment,
interest and attorneys’ fees on July 2, 2004.
Following the LePage’s verdict and appellate rulings, certain direct and indirect tape purchasers filed multiple
purported class actions and one individual action against the Company in various state and federal courts. Twelve
putative class actions brought on behalf of indirect purchasers of tape are now pending in California, Pennsylvania,
Florida, Tennessee, Wisconsin, Kansas, South Carolina, New Mexico, and Iowa, and two brought on behalf of direct
purchasers are pending in the federal court in Philadelphia (some of the pending actions were filed in the fourth
quarter of 2004 and one was filed in January 2005). These cases allege that the Company competed unfairly and
unlawfully monopolized alleged markets for transparent tape, and they seek to recover on behalf of variously defined
classes of direct and indirect purchasers damages in the form of price overcharges the Company allegedly charged
for these products. In the case in federal court in California in which the lower court had previously granted the
Company’s motion for summary judgment, the Ninth Circuit Court of Appeals granted the parties’ joint request to hold
the plaintiffs’ appeal of the summary judgment ruling in abeyance pending settlement discussions.
3M has reached a proposed settlement in February 2005 with all named plaintiffs in the 12 indirect purchaser antitrust
putative class actions pending against the Company in the various state courts noted above and in the California
federal court. If an agreement is executed by the parties and receives federal court approval and all conditions in the
agreement are satisfied, the settlement would terminate all 12 actions and release the claims of class members
nationwide. The amount of the proposed settlement is not material to 3M. The proposed settlement does not affect
the class and individual actions brought by direct purchasers of 3M transparent tape that are pending in a federal
court in Pennsylvania and does not constitute any admission of liability by the Company.
Pretrial proceedings continue in the direct purchaser class action pending in the federal court in Philadelphia. In
August 2004, that court certified a class consisting of all 3M customers who directly bought transparent and
invisible tape (but not private label tape) from October 1998 to the present. Thereafter, two additional lawsuits
were filed against the Company by alleged direct tape purchasers in the federal court in Philadelphia. In one, the
plaintiff opted out of the class described above and filed an individual lawsuit in September 2004. In the other, the
plaintiff filed a purported class action in December 2004 on behalf of customers (private label tape purchasers)
excluded from the August class certification order; the Company has moved to dismiss that action as untimely and
on other grounds.
Breast Implant Litigation
The Company and certain other companies were named as defendants in a number of claims and lawsuits
alleging damages for personal injuries of various types resulting from breast implants formerly manufactured by
the Company or a related company. The vast majority of claims against the Company have been resolved. The
Company does not consider its remaining probable liability to be material. Information concerning the associated
insurance receivable and legal proceedings related to it follows in the paragraph entitled Breast Implant Insurance
Receivables.
Respirator Mask/Asbestos Litigation
For more than 25 years, the Company has defended and resolved the claims of over 340,000 individual claimants
alleging injuries from occupational dust exposures. As of December 31, 2004, the Company is a named
defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent
approximately 76,600 individual claimants, a decrease from the approximately 88,700 individual claimants with
actions pending at December 31, 2003.