3M 2015 Annual Report Download - page 104

TableofContents
RespiratorMask/AsbestosLitigation
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AsofDecember31,2015,theCompanyisanameddefendant,withmultipleco-defendants,innumerouslawsuitsinvariouscourts
thatpurporttorepresentapproximately2,130individualclaimants,comparedtoapproximately2,220individualclaimantswith
actionspendingatDecember31,2014.
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ThevastmajorityofthelawsuitsandclaimsresolvedbyandcurrentlypendingagainsttheCompanyallegeuseofsomeofthe
Company’smaskandrespiratorproductsandseekdamagesfromtheCompanyandotherdefendantsforallegedpersonalinjuryfrom
workplaceexposurestoasbestos,silica,coalminedustorotheroccupationaldustsfoundinproductsmanufacturedbyother
defendantsorgenerallyintheworkplace.Aminorityofthelawsuitsandclaimsresolvedbyandcurrentlypendingagainstthe
Companygenerallyallegepersonalinjuryfromoccupationalexposuretoasbestosfromproductspreviouslymanufacturedbythe
Company,whichareoftenunspecified,aswellasproductsmanufacturedbyotherdefendants,oroccasionallyatCompanypremises.
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TheCompany’scurrentvolumeofnewandpendingmattersissubstantiallylowerthanitexperiencedatthepeakoffilingsin2003.
TheCompanyexpectsthatfilingofclaimsbyunimpairedclaimantsinthefuturewillcontinuetobeatmuchlowerlevelsthaninthe
past.Accordingly,thenumberofclaimsallegingmoreseriousinjuries,includingmesotheliomaandothermalignancies,will
representagreaterpercentageoftotalclaimsthaninthepast.TheCompanyhasprevailedinalltencasestakentotrial,including
eightoftheninecasestriedtoverdict(suchtrialsoccurredin1999,2000,2001,2003,2004,2007,and2015),andanappellate
reversalin2005ofthe2001juryverdictadversetotheCompany.Theremaining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.
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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.
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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.Thecasehasbeeninactivesincethefourthquarterof2007,other
thanacasemanagementconferenceinMarch2011.InNovember2013,theStatefiledamotiontobifurcatethelawsuitintoseparate
liabilityanddamagesproceedings.Atthehearingonthemotion,thecourtdeclinedtobifurcatethelawsuit.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lackofanymeaningfuldiscoveryresponsesbytheStateof
WestVirginia,theotherwise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,if
any,ajurymightallocatetoeachdefendantifthecaseisultimatelytried.
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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manufacturedbytheCompany),(v)thenumberofcurrentclaimsandaprojectionofthe
numberoffutureasbestosandotherclaimsthatmaybefiledagainsttheCompany,(vi)thecosttoresolverecentlysettledclaims,
and(vii)anestimateofthecosttoresolveanddefendagainstcurrentandfutureclaims.
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