Originally published by Reuters & Westlaw Today on August 31, 2023.
PFAS (per- and polyfluoroalkyl substances) are a class of thousands of synthetic chemicals found in many different consumer, commercial, and industrial products, including firefighting foams known as AFFF. Certain PFAS are alleged to cause kidney, testicular, and prostate cancer, and to be toxic to the reproductive system, and the number of claims grows daily.
As the first PFAS bellwether trial was set to begin in June 2023 in the City of Stuart, Florida, two massive settlements were announced. The City alleged Defendants were subject to liability for strict product liability, negligence, and nuisance claims arising from alleged design defects and failure to warn regarding the environmental hazards and toxic effects of PFAS in AFFF.
Defendants 3M reached a tentative settlement to pay $10.3 billion to $12.5 billion, and DuPont de Nemours, Inc., Chemours Company, and Corteva, Inc. ("DuPont") agreed to pay $1.185 billion. The settlement monies will be earmarked to cover testing and remediation costs related to PFAS in drinking water aquifers.
Both of these settlements are tentative and require court approval, and the number of plaintiffs who will share in the settlement funds will not be known for a number of years. The contours of the settlement agreements, oppositions to those agreements, and potential impacts resulting from approval are discussed below.
PFAS MDL in South Carolina
United States District Court Judge Richard Gergel in Charleston presides over the PFAS multidistrict litigation proceeding ("MDL"). MDLs are employed in mass tort cases to help streamline litigation and facilitate settlements and consistent rulings on critical issues. The City of Stuart case is an example, as it was the first bellwether trial and lead to the two big, proposed settlements.
There are currently over 5,000 cases total in the MDL, and more cases are added nearly every day. The cases in the MDL fall into three distinct categories:
- Personal injury plaintiffs claiming injury from exposure to PFAS.
- Actions filed by individual states by Attorney Generals for natural resource and other damages.
- Public water supplier plaintiffs seeking drinking water testing and remediation costs.
The 3M and DuPont settlements pertain only to the last category of cases. There are over 440 public water supplier plaintiffs in the MDL; however, approximately six to seven thousand more public water suppliers are eligible to participate in the settlements.
How the proposed settlements will work
The settlements are proposed as "class settlements," and therefore require approval from Judge Gergel. Basically, to be eligible, the public water supplier must have positive detections of PFAS in its water system, whether currently or during testing over the next several years.
Public water supplier plaintiffs may choose to opt-out of the settlements. A complicated calculus will be employed to determine the amount each public water supplier will be eligible to recover, depending upon such technical aspects as flow rates in the distribution systems and magnitude of contamination.
Oppositions to approval motions
3M and DuPont have filed motions for approval of the settlements, and oppositions to the motions have been filed. Most significantly, on July 26, 2023, a coalition of Attorney Generals from 22 states and numerous U.S. territories have filed an Omnibus Opposition in the MDL proceeding. See, Omnibus Opposition, Civil Action No. 2:23-cv-03147-RMG ("MDL proceeding"), Document No. 3462, filed on July 26, 2023.
Although many grounds are asserted in the Opposition, the following are particularly noteworthy.
First, the 3M settlement contains an overbroad indemnity clause that could shift billions of dollars of 3M's liability to public water suppliers and ultimately states' taxpayers. Thus, personal injury plaintiffs suing 3M may be able to seek compensation from the water suppliers, as a result of this provision.
Second, the proposed settlements would apply to a large number of public water suppliers in the United States, even those that have not sued and those that have not yet tested for PFAS in their water supplies. The settlement agreements put the onus on the individual public water suppliers to proactively opt out, whether or not they have filed suit or even tested for PFAS. The concern is that the public water suppliers will have a 60-day window to determine whether to opt out of the proposed class. The public water suppliers assert that is insufficient time to evaluate the scope of their claims or the amount of potential recovery to make rational decisions regarding opt-out.
Finally, the opposition briefs have uniformly criticized the amounts of the settlements as insufficient to cover the PFAS-related damages caused by the settling defendants.
Oppositions and replies to the motions for approval are currently being filed, and it is expected that the hearing date will occur sometime in the next two to three months. Further, it is understood that discussions have been ongoing with parties who have filed oppositions, in an effort to winnow down the objections and work out agreements on some of the disputes.
Impacts of settlements, if approved
If the settlements are approved, the most obvious immediate impact is relief from liability for 3M and DuPont for the testing and remediation costs to be incurred by those public water supplier plaintiffs that do not opt out of the class. The impacts flowing from such relief may be far-reaching and widespread.
First, the parties opposing the settlements, as well as environmental advocates, have asserted that the amounts of the two settlements are far less than what is necessary to cover the testing and remediation costs to be incurred by those plaintiffs in the class.
For instance, there are over 155,000 public water suppliers in the United States, and the early estimates to clean up PFAS in drinking water nationwide have been pegged to exceed $400 billion, although other estimates suggest that the price could be lower.
California has pointed out that it operates financial system programs that assist water systems with certain PFAS remediation costs, and that it has already received 18 applications to that program, with a collective project cost of over $633 million. Further, thousands of California water systems have not even started testing for PFAS contamination. See, Joinder of California State Water Resources Control Board to Omnibus Opposition, Document No. 3466 in MDL proceeding, filed on July 26, 2023.
If it is borne out that the future costs greatly exceed the amounts of the settlements, the other companies defending against the public water supplier plaintiffs may be subject to unfairly large liabilities, perhaps even threatening the financial viability of such companies. It is important to note that the settlements will not result in the release of any other defendants in the cases prosecuted by the public water supplier plaintiffs.
In fact, the first large corporate bankruptcy related to PFAS liabilities occurred on May 14, 2023. Kidde-Fenwal ("Kidde") was the first defendant in the MDL to file for Chapter 11 bankruptcy protection. Kidde is an AFFF manufacturer named as a defendant in thousands of cases in the MDL, by both public water suppliers and personal injury plaintiffs.
Interestingly, at the most recent status conference, Judge Gergel commented upon his concerns about the magnitude of liabilities at stake in the PFAS litigation and suggested that parties from both sides of the MDL proceeding should enlist the help of Congress to help address the situation, given the potentiality for further bankruptcies.
Second, if the future costs associated with PFAS greatly exceed the amount of the settlements, companies downstream to the AFFF manufacturers should be concerned. The reality is that individual public water suppliers will receive varying amounts from the settlements, and it appears likely that the bulk of those plaintiffs will not receive full compensation for all costs.
Further, if additional AFFF manufacturers file for bankruptcy, the resources available for any potential judgments from these defendants will shrink accordingly. As has been seen in the asbestos world of litigation, in those situations where liability potentials become enormous and the major defendants drop out from bankruptcy, even very tangential defendants can become frequent targets.
Lastly, it is important to emphasize that these two settlements focus on liability only to public water supplier plaintiffs for those damages associated with drinking water aquifers and supplies. Although these settlements are for an enormous amount of money, PFAS liabilities (and costs to defend such actions) will extend far and above the costs to be incurred by the public water supplier plaintiffs involved in the settlements.
In addition to the several thousand personal injury claims currently pending, and growing by the day, the state Attorney Generals are seeking damages for a myriad of damages, and the EPA (Environmental Protection Agency) is considering the promulgation of a new regulation to establish certain PFAS as hazardous substances under CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) which will only expand liability concerns. For all of these reasons, those companies not involved with AFFF but with PFAS in other applications should be concerned and consider measures to reduce or eliminate such use.