3M Wins 3rd Circ. Ruling To Send PFAS Suit To Minnesota
Law360, November 19, 2020
The Third Circuit has overturned a New Jersey district court’s decision to keep a securities fraud class against 3M over its production of “forever chemicals,” saying the trial court put too much weight on allegations of environmental harms in the state.
A three-judge panel sent the suit to Minnesota Wednesday after determining that the dispute is not solely about environmental harms such as contaminated drinking water in New Jersey. It said the lower court failed to correctly consider several important factors, including that 3M is headquartered in Minnesota, that the statements alleged to have been fraudulent were issued predominantly from the headquarters and that there would be fewer obstacles in the way of witnesses showing up to court there.
Investors have alleged that 3M, which is behind well-known products such as Post-it notes and Scotch Tape, duped investors by issuing financial statements that “drastically minimized” any possible liabilities from its manufacture and disposal of per- and polyfluoroalkyl substances, or PFAS chemicals.
The panel said that “on balance, the private and public interest factors favor transfer. In our view, the district court clearly and indisputably erred by denying 3M’s transfer motion.”
PFAS chemicals are used for a variety of industrial purposes including non-stick pans and flame-retardant foams, but they have been identified as leading to a host of issues including reproductive and developmental problems, and possibly cancer. They are known as “forever chemicals” because of their longevity in the human body and in the environment.
The investors launched their suit in December, claiming that 3M had issued several statements that reflected “trivial reserves for 3M’s environmental liabilities, including for PFAS,” but investors later learned that the company’s “PFAS exposure is well into the billions of dollars,” according to the complaint.
U.S. District Judge Claire C. Cecchi denied the original bid to transfer the case to Minnesota in August, saying among other things that New Jersey — where the drinking water of around 1 in 5 people is contaminated with PFAS chemicals — has been heavily affected by the contamination and that many New Jersey residents would likely be called to testify.
Judge Cecchi also noted that 3M has a heavy presence in the Garden State and that its “size, resources, and ongoing litigation in this district in other matters indicate that it is not overly burdensome for the company to conduct litigation here.” The decision was promptly appealed.
The suit is one of many that have been filed across the country in recent years seeking to hold chemical companies accountable for PFAS contamination. Another notable suit has been filed against DuPont in North Carolina, for instance, and the U.S. Environmental Protection Agency has been urged to act quickly to regulate the chemicals.
3M declined to comment.
Counsel for the investors did not immediately respond to requests for comment.
3M is represented by Walter R. Krzastek and Eric Todd Kanefsky of Calcagni & Kanefsky LLP; and Meredith Kotler, Mary Eaton and Scott A. Eisman of Freshfields Bruckhaus Deringer LLP.
The investors are represented by Andrew S. Love, Chad Johnson, Noam Mandel, Desiree Cummings, Samuel H. Rudman and Robert D. Gerson of Robbins Geller Rudman & Dowd LLP; Gregg S. Levin and Christopher F. Moriarty of Motley Rice LLC; and Christopher A. Seeger of Seeger Weiss LLP.
The case is In re: 3M Co. Securities Litigation, case number 20-2864, in the U.S. Court of Appeals for the Third Circuit.
— Clark Mindock. Additional reporting by Dorothy Atkins, Emilie Ruscoe and Bill Wichert. Editing by Peter Rozovsky.