3M 2011 Annual Report Download - page 106

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malignancies, will represent a greater percentage of total claims than in the past. The Company has prevailed in all
nine cases taken to trial, including seven of the eight cases tried to verdict (such trials occurred in 1999, 2000, 2001,
2003, 2004, and 2007), and an appellate reversal in 2005 of the 2001 jury verdict adverse to the Company. The ninth
case, tried in 2009, was dismissed by the Court at the close of plaintiff’s evidence, based on the Court’s legal finding
that the plaintiff had not presented sufficient evidence to support a jury verdict. This case is being appealed by the
plaintiffs and briefing is complete and the parties are waiting for the court to set a hearing date for oral argument.
The Company has demonstrated in these past trial proceedings that its respiratory protection products are effective
as claimed when used in the intended manner and in the intended circumstances. Consequently the Company
believes that claimants are unable to establish that their medical conditions, even if significant, are attributable to the
Company’s respiratory protection products. Nonetheless the Company’s litigation experience indicates that claims of
persons with malignant conditions are costlier to resolve than the claims of unimpaired persons, and it therefore
believes the average cost of resolving pending and future claims on a per-claim basis will continue to be higher than
it experienced in prior periods when the vast majority of claims were asserted by the unimpaired.
Plaintiffs have asserted specific dollar claims for damages in approximately 39% of the 1,053 lawsuits that were
pending against the Company at the end of 2011 in all jurisdictions. A majority of states restrict or prohibit specifying
damages in tort cases such as these, and most of the remaining jurisdictions do not require such specification. In
those cases in which plaintiffs choose to assert specific dollar amounts in their complaints, brought in states that
permit such pleading, the amounts claimed are typically not meaningful as an indicator of the Company’s potential
liability. This is because (a) the amounts claimed typically bear no relation to the extent of the plaintiff’s injury, if any;
(b) the complaints nearly always assert claims against multiple defendants with the typical complaint asserting claims
against as few as a dozen different defendants to upwards of 100 different defendants, the damages alleged are not
attributed to individual defendants, and a defendant’s share of liability may turn on the law of joint and several
liability, which can vary by state, and by the amount of fault a jury allocates to each defendant if a case is ultimately
tried before a jury; (c) many cases are filed against the Company even though the plaintiffs did not use any of the
Company’s products and, ultimately, are withdrawn or dismissed without any payment; and (d) many cases are
brought on behalf of plaintiffs who have not suffered any medical injury, and, ultimately, are resolved without any
payment or a payment that is a small fraction of the damages initially claimed. Of the 410 pending cases in which
purported damage amounts are specified in the complaints, 250 cases involve claims of $100,000 or less, (three
(3) of which also allege punitive damages of $15,000, 15 of which also allege punitive damages of $10 million, and
three (3) of which also allege punitive damages of $20 million); 102 cases involve claims between $100,000 and $3
million (46 of which also allege punitive damages of $250,000, and 49 of which also allege punitive damages of $2
million); seven (7) cases involve claims between $3 million and $7.5 million (all of which also allege punitive
damages of $5 million); three (3) cases involve claims of $10 million (two (2) of which also allege punitive damages
of $10 million); 12 cases involve claims of $50 million (all of which also allege punitive damages of $50 million); and
36 cases involve claims of $100 million (35 of which also allege punitive damages of $100 million, and one (1) of
which also alleges punitive damages of $300 million). Some complaints allege that the compensatory and punitive
damages are at least the amounts specified. As previously stated, the Company’s experience and the other reasons
cited indicate that the damage amounts specified in complaints are not a meaningful factor in any assessment of the
Company’s potential liability.
As previously reported, the State of West Virginia, through its Attorney General, filed a complaint in 2003 against the
Company and two other manufacturers of respiratory protection products in the Circuit Court of Lincoln County, West
Virginia and amended its complaint in 2005. The amended complaint seeks substantial, but unspecified,
compensatory damages primarily for reimbursement of the costs allegedly incurred by the State for worker’s
compensation and healthcare benefits provided to all workers with occupational pneumoconiosis and unspecified
punitive damages. While the case has been inactive since the fourth quarter of 2007, the Court held a case
management conference in March 2011, but no further activity has occurred in the case since that conference. No
liability has been recorded for this matter because the Company believes that liability is not probable and estimable
at this time. In addition, the Company is not able to estimate a possible loss or range of loss given the minimal
activity in this case and the fact that the complaint asserts claims against two other manufacturers where a
defendant’s share of liability may turn on the law of joint and several liability and by the amount of fault a jury
allocates to each defendant if a case is ultimately tried.
Respirator Mask/Asbestos Liabilities and Insurance Receivables: The Company estimates its respirator
mask/asbestos liabilities, including the cost to resolve the claims and defense costs, by examining: (i) the Company’s
experience in resolving claims, (ii) apparent trends, (iii) the apparent quality of claims (e.g., whether the claim has
been asserted on behalf of asymptomatic claimants), (iv) changes in the nature and mix of claims (e.g., the
proportion of claims asserting usage of the Company’s mask or respirator products and alleging exposure to each of
asbestos, silica, coal or other occupational dusts, and claims pleading use of asbestos-containing products allegedly