3M 2015 Annual Report Download - page 106

TableofContents
quarterlyfeeof$100,000,Cabotwillretainresponsibilityandliabilityfor,andindemnifyAearoagainst,anyproductliabilityclaims
involvingexposuretoasbestos,silica,orsilicaproductsforrespiratorssoldpriortoJuly11,1995.Becauseofthedifficultyin
determininghowlongaparticularrespiratorremainsinthestreamofcommerceafterbeingsold,AearoandCabothaveappliedthe
agreementtoclaimsarisingoutoftheallegeduseofrespiratorsinvolvingexposuretoasbestos,silicaorsilicaproductspriorto
January1,1997.Withthesearrangementsinplace,Aearo’spotentialliabilityislimitedtoexposuresallegedtohavearisenfromthe
useofrespiratorsinvolvingexposuretoasbestos,silica,orsilicaproductsonorafterJanuary1,1997.Todate,Aearohaselectedto
paythequarterlyfee.Aearocouldpotentiallybeexposedtoadditionalclaimsforsomepartofthepre-July11,1995periodcovered
byitsagreementwithCabotifAearoelectstodiscontinueitsparticipationinthisarrangement,orifCabotisnolongerabletomeet
itsobligationsinthesematters.
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InMarch2012,CabotCSCCorporationandCabotCorporationfiledalawsuitagainstAearointheSuperiorCourtofSuffolk
County,MassachusettsseekingdeclaratoryreliefastothescopeofCabot’sindemnityobligationsundertheJuly11,1995
agreement,includingwhetherCabothasretainedliabilityforcoalworkers’pneumoconiosisclaims,andseekingdamagesforbreach
ofcontract.InJune2014,thecourtgrantedAearo’smotionforsummaryjudgmentonallclaims.Cabothasfiledamotionfor
reconsideration,andAearofiledamotionforclarificationofthecourt’sordergrantingAearosummaryjudgment.InOctober2014,
thecourtdeniedAearo’smotionforclarification.Thecourtalsodenied,inpart,Cabot’smotionforreconsiderationandreaffirmed
itsrulingthatCabotretainedliabilityforclaimsinvolvingexposuretosilicaincoalminedust.ThecourtgrantedCabot’smotion,in
part,rulingthatAearowasnotentitledtosummaryjudgmentonCabot’sclaimforequitableallocation,andonwhetherthe258
underlyingclaimswereCabot’sresponsibility.Thesetwoissuesremaininthecaseforfurtherproceedings.Newmotionsfor
summaryjudgmentwerefiledandthecourtheardoralargumentsinOctober2015.
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DevelopmentsmayoccurthatcouldaffecttheestimateofAearo’sliabilities.Thesedevelopmentsinclude,butarenotlimitedto:
(i)significantchangesinthenumberoffutureclaims,(ii)significantchangesintheaveragecostofresolvingclaims,(iii)significant
changesinthelegalcostsofdefendingtheseclaims,(iv)significantchangesinthemixandnatureofclaimsreceived,(v)trialand
appellateoutcomes,(vi)significantchangesinthelawandprocedureapplicabletotheseclaims,(vii)significantchangesinthe
liabilityallocationamongtheco-defendants,(viii)thefinancialviabilityofmembersofthePayorGroupincludingexhaustionof
availableinsurancecoveragelimits,and/or(ix)adeterminationthattheinterpretationofthecontractualobligationsonwhichAearo
hasestimateditsshareofliabilityisinaccurate.TheCompanycannotdeterminetheimpactofthesepotentialdevelopmentsonits
currentestimateofAearo’sshareofliabilityfortheseexistingandfutureclaims.Ifanyofthedevelopmentsdescribedabovewereto
occur,theactualamountoftheseliabilitiesforexistingandfutureclaimscouldbesignificantlylargerthantheamountaccrued.
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Becauseoftheinherentdifficultyinprojectingthenumberofclaimsthathavenotyetbeenasserted,thecomplexityofallocating
responsibilityforfutureclaimsamongthePayorGroup,andtheseveralpossibledevelopmentsthatmayoccurthatcouldaffectthe
estimateofAearo’sliabilities,theCompanycannotestimatetheamountorrangeofamountsbywhichAearo’sliabilitymayexceed
theaccrualtheCompanyhasestablished.
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EnvironmentalMattersandLitigation
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TheCompany’soperationsaresubjecttoenvironmentallawsandregulationsincludingthosepertainingtoairemissions,wastewater
discharges,toxicsubstances,andthehandlinganddisposalofsolidandhazardouswastesenforceablebynational,state,andlocal
authoritiesaroundtheworld,andprivatepartiesintheUnitedStatesandabroad.Theselawsandregulationsprovide,undercertain
circumstances,abasisfortheremediationofcontamination,forrestorationoforcompensationfordamagestonaturalresources,and
forpersonalinjuryandpropertydamageclaims.TheCompanyhasincurred,andwillcontinuetoincur,costsandcapital
expendituresincomplyingwiththeselawsandregulations,defendingpersonalinjuryandpropertydamageclaims,andmodifyingits
businessoperationsinlightofitsenvironmentalresponsibilities.Initsefforttosatisfyitsenvironmentalresponsibilitiesandcomply
withenvironmentallawsandregulations,theCompanyhasestablished,andperiodicallyupdates,policiesrelatingtoenvironmental
standardsofperformanceforitsoperationsworldwide.
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Undercertainenvironmentallaws,includingtheUnitedStatesComprehensiveEnvironmentalResponse,CompensationandLiability
Actof1980andsimilarstatelaws,theCompanymaybejointlyandseverallyliable,typicallywithother
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