3M 2010 Annual Report Download - page 108

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malignancies, while remaining relatively constant and consistent with historical experience, 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
underway.
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 31% of the 854 lawsuits that were
pending against the Company at the end of 2010 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 275 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 261 pending cases in which
purported damage amounts are specified in the complaints, 158 cases involve claims of $100,000 or less, (five (5) of
which also allege punitive damages of $10 million); 98 cases involve claims between $100,000 and $3 million; three
(3) cases involve claims of $10 million (two (2) of which also allege punitive damages of $10 million); one (1) case
involves claims of $10 million to $50 million (which also alleges punitive damages of $15 million); and one (1) case
involves claims of $50 million (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’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 it 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 State of West Virginia has recently asked the Court to set a
case management conference in the spring of 2011. No liability has been recorded for this matter because the
Company believes that liability is not probable and estimable at this time. In addition, 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 before a jury.
Respirator Mask/Asbestos Liabilities and Insurance Receivables: The Company estimates its respirator
mask/asbestos liabilities, including the cost to resolve the claim 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.