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Environment & Energy Report

3M PFAS Deal With Wolverine May Foreshadow Cases (Corrected)

Feb. 21, 2020, 4:34 PMUpdated: Feb. 24, 2020, 8:50 PM

3M Co.'s agreement to pay $55 million to clothier Wolverine World Wide Inc. to clean up PFAS in Michigan could serve as a model for other companies hoping to shift their liabilities for “forever chemicals,” lawyers say.

3M announced the agreement with Wolverine on Thursday to resolve a legal dispute between the two companies over who should pay to clean up pollution near a former Wolverine manufacturing site. 3M originally developed and produced per- and polyfluoroalkyl substances, or PFAS, in the 1940s. The chemicals have been found in drinking water in towns across the country.

Wolverine used PFAS-laden Scotchgard to waterproof the clothing and shoes it produces, according to the company’s complaint against 3M, which changed the Scotchgard formula around 2002 over concerns about PFAS. Wolverine manufactures shoes for brands including Saucony, Hush Puppies, Sperry, and Keds.

The 3M-Wolverine agreement “could be precedent for what other companies could be doing around the country to address this really challenging problem,” said Ralph A. DeMeo, a Baker, Donelson, Bearman, Caldwell & Berkowitz PC lawyer.

DeMeo represents local governments and businesses facing PFAS-related lawsuits in Florida. He said other PFAS users could try to make similar arrangements with 3M.

Carpet manufacturers with the chemicals in their products are one example, said John A. Sheehan, a Cohen Milstein Sellers & Toll PLLC attorney who advises potential plaintiffs on PFAS. Shaw Industries Inc. and Mohawk Industries Inc., for instance, are facing litigation in Georgia over alleged PFAS contamination from making flooring with Scotchgard.

Sheehan said plaintiffs could consider broadening their litigation strategy to target smaller companies that have used PFAS, knowing 3M could help foot the bill for a potential settlement.

“There’s a deep pocket now behind end users,” he said.

The 3M settlement could also open the door for companies that have PFAS waste, said Jeff Civins, senior counsel at Haynes and Boone LLP in Austin, Texas. It’s one of the few cases where a purchaser, in this case Wolverine, has sued and settled with a manufacturer, 3M, because of contamination associated with the purchaser’s disposal of the manufacturer’s product. Wolverine alleges 3M failed to disclose crucial facts about the product.

‘Fact-by-Fact’

But Atlanta-based King & Spalding LLP attorney Doug Henderson cautioned that 3M’s agreement with Wolverine might be unique to the two companies’ business relationship.

“All settlements are fact-by-fact and agreement-by-agreement,” he said. “Sometimes you can make broad statements, but I don’t think this means that going forward a company would say, ‘I’m always going to do this for everybody else.’”

The agreement likely included clauses where 3M did not admit liability for the contaminant, and that the agreement’s provisions couldn’t be used in other cases, said Bloomberg Intelligence analyst Holly Froum. In a research note, she said 3M’s deal with Wolverine might be a “bad omen” for the company, “given 3M’s paying the lion share of a claim against an end-user.”

The announcement comes just weeks after Wolverine reached a $70 million settlement with Michigan regulators over contaminated drinking water in Plainfield and Algoma townships in Michigan.

“This agreement will support Wolverine’s work with the State of Michigan to conduct previously announced and continuing investigation and remediation activities, which will improve water infrastructure and treatment in certain communities in western Michigan,” John Banovetz, 3M’s senior vice president for innovation and stewardship and chief technology officer, said in a statement.

‘Writing on the Wall’

DeMeo noted that local governments and small companies often lack the resources to handle PFAS-related liabilities. He said he quickly forwarded 3M’s announcement to his clients, saying, “This may be your future.”

“I think they’re seeing the writing on the wall that it’s only going to get worse,” DeMeo said of 3M. “These suits are common. They’re going to be everywhere. In that sense, it probably does make a lot of sense from a corporate standpoint to settle and try to cut your losses.”

Wolverine’s agreement with 3M may be an appealing strategy for companies in the midst of cleaning up contaminated sites, said Sarah Peterman Bell, partner at Farella Braun + Martel LLP in San Francisco, Calif. That type of agreement could provide certain funding for companies facing uncertain future remediation costs, she said.

3M and DuPont originally developed and produced PFAS in the 1940s. Hundreds of companies, including Wolverine and W. L. Gore & Associates Inc., have used the chemicals made with the particular PFAS that 3M, DuPont, and Chemours, a DuPont spinoff, have produced to make thousands of products such as semiconductors, sticky notes, and shoes.

The original PFAS manufacturers, in addition to Chemours and other companies using the chemicals, are the subject of several major PFAS-related lawsuits.

(Corrects name in 17th paragraph in Feb. 21 story.)

To contact the reporters on this story: Ellen M. Gilmer in Washington at egilmer@bloombergenvironment.com; Sylvia Carignan in Washington at scarignan@bloombergenvironment.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Sylvia Carignan at scarignan@bloombergenvironment.com

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