3M 2004 Annual Report Download - page 36

10
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 or other occupational
dusts, found in products manufactured by other defendants or generally in the workplace. The remaining
claimants generally allege personal injury from occupational exposure to asbestos from products previously
manufactured by the Company, which are often unspecified, and by other defendants, or occasionally at Company
premises.
In many of these lawsuits and claims, the Company is named as a defendant with multiple co-defendants where
no product the Company manufactured is involved or where the Company is ultimately determined not to have
manufactured the products identified by the plaintiffs. The Company’s vigorous defense of this litigation has
resulted in: (i) dismissals of many lawsuits without any payment by the Company; (ii) an average settlement value
of less than $1,000 per claimant for all of the claims and lawsuits that the Company has resolved, including those
dismissed without payment; and (iii) jury verdicts for the Company in six of the seven cases tried to verdict, and an
appellate reversal of the one jury verdict adverse to the Company.
On January 20, 2005, the Mississippi Supreme Court reversed the $22.5 million jury verdict adverse to the
Company that was returned in Holmes County, Mississippi, in 2001. The Supreme Court ruled, in part, that the
plaintiffs failed to prove any claim against the Company’s respiratory products and in effect that the trial judge
should not have submitted the case to the jury in the first place. The Mississippi Supreme Court’s decision is final
and terminates the claims of the plaintiffs against the Company. It will not affect 3M’s earnings or reserves. On
February 3, 2005, the plaintiffs filed a petition for rehearing with the Mississippi Supreme Court to which the Company
opposed.
Of the claims currently pending against the Company noted above, the Company joined other defendants in
removing approximately 7,600 silica-related claims from certain Mississippi state courts to the United States
District Courts for the Northern and Southern District of Mississippi. These claims were subsequently consolidated
before a single federal court in the Southern District of Texas (Corpus Christi) for coordinated pretrial proceedings.
The Company has manufactured and continues to manufacture certain products that contain silica, but does not
believe these products pose a health risk to any user or bystander when used as intended. The Company
understands that the vast majority of these claims, however, are based on alleged use of some of the Company’s
mask and respirator products.
Plaintiffs have asserted specific dollar claims for damages in approximately 57% of the 10,967 lawsuits that were
pending against the Company at the end of 2004 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 more than 50 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 6,248 pending cases in which purported
damage amounts are specified in the complaints, 5,383 cases involve claims of $100,000 or less (two of these
cases also allege punitive damages of $10,000 and $75,000 respectively), 215 cases involve claims between
$100,000 and $3 million (83 of these cases also each allege punitive damages of $250,000, one of them also
alleges punitive damages of $1 million, 46 of them also each allege punitive damages of $1.5 million, 72 of them
each allege punitive damages of $2 million, and one of them also alleges punitive damages of $3 million), 62
cases involve claims of $7.5 million, one case has claims of $8.7 million and alleges punitive damages of
$5 million, 519 cases involve claims of $10 million (one of these cases also alleges punitive damages of $350,000,
and 446 of them also each allege $10 million in punitive damages), 16 cases involve claims of $15 million (14 of
these cases also each allege $15 million in punitive damages), 50 cases involve claims of $20 million (all of which
also allege an equal amount in punitive damages), and two cases involve claims of $50 million (one of which also
alleges punitive damages of $50 million). Some complaints allege that the compensatory and punitive damages
are at least the amounts specified. As previously stated, the Company has more than 25 years of experience in
defending litigation of this type, has resolved the claims of over 340,000 individuals with a cumulative average
settlement amount of less than $1,000 per claimant, and based on this experience and for the other reasons cited,