3M 2007 Annual Report Download - page 80

74
Related Party Activity:
Purchases from related parties (largely related to companies in which 3M has an equity interest) totaled approximately
$144 million in 2007 ($160 million in 2006 and $141 million in 2005). Receivables due from related parties (largely related
to receivables from employees for relocation and other ordinary business expense advances) totaled approximately
$40 million in 2007 ($36 million in 2006, and $37 million in 2005). 3M sales to related parties totaled approximately $6
million in 2007 ($4 million in 2006, and $5 million in 2005). Indebtedness to 3M from related parties was not material in
2007, 2006 and 2005.
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.
Shareholder Derivative Litigation
As previously reported, in July 2007, a shareholder derivative lawsuit was filed in the U.S. District Court for the District of
Delaware against the Company as nominal defendant and against each then current member of the Board of Directors
and the officers named in the Summary Compensation Table of the 2007 Proxy Statement. The suit alleges that the
Company’s 2007 Proxy Statement contained false and misleading statements concerning the tax deductibility of
compensation payable under the Executive Annual Incentive Plan (“Plan”) and the standards for determining the
amounts payable under the Plan. The lawsuit seeks a declaration voiding shareholder approval of the Plan, termination
of the Plan, voiding the elections of directors, equitable accounting, and awarding costs, including attorneys’ fees. Plaintiff
filed a motion for summary judgment, and the defendants filed a motion to dismiss all claims on the grounds that plaintiff
had failed to make a demand on the Board and had otherwise failed to state a proper claim under the Private Securities
Litigation Reform Act. The defendants also moved to transfer the case from the District of Delaware to the District of
Minnesota. In February 2008, the Court denied without prejudice the plaintiff’s motion for summary judgment.
Breast Implant Litigation
The Company and certain other companies were named as defendants in past years in numerous 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 hundreds of thousands of individual
claimants alleging injuries from occupational dust exposures. As of December 31, 2007, the Company is a named
defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately
8,750 individual claimants, a decrease from the approximately 17,700 individual claimants with actions pending at
December 31, 2006.
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. A minority of claimants 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.
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 identified 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
dismissals of many claims without any payment by the Company, and jury verdicts for the Company in seven of the eight
cases tried to verdict (such trials occurred in 1999, 2000, 2003, 2004 and 2007), and an appellate reversal in 2005 of the
one jury verdict adverse to the Company.
As previously reported, the Company won a defense verdict in July 2007 from a jury in the federal court in Eastern
District of Missouri. The jury found the Company had no liability whatever to a plaintiff who claimed he had silicosis and a
related cancer and sought to recover damages from the Company arising from his alleged illness, which he claimed to
have contracted from occupational exposure to silica despite his purported use of the Company’s respirator mask
equipment at various times. The jury rejected each of the plaintiff’s theories of liability against the Company.