Water Utilities Must Decide Whether to Give Up PFAS Claims Against 3M, DuPont

Drinking water providers across America have received notices (or will soon) requiring them to decide under imminent court-ordered deadlines whether to join in two multibillion-dollar class settlements in return for releasing their known and unknown PFAS-contamination claims against two of the largest global PFAS manufacturers: 3M Company and DuPont de Nemours, Inc. (and companies associated with DuPont). Members of the proposed class of drinking water providers—estimated at over 12,000—have until December 4, 2023 to decide whether to join in the proposed DuPont settlement and until December 11, 2023 to decide whether to join the proposed 3M settlement. If the water providers simply ignore the class settlement notices, they could unwittingly release their claims against both companies whether or not they receive any settlement payments in return.

The deadlines may come as a surprise to water providers that have not tracked the proposed settlements, tested their drinking water for PFAS, or gathered the information necessary to estimate their treatment costs or the claims that may arise in the future against them.

The considerations relevant to any individual water provider will vary and depend on many factors. A more comprehensive preliminary analysis of some of the pros and cons of settling is available from Marten Law upon request here.

Neither this newsletter nor our preliminary analysis are legal advice, and they should not be relied upon in making decisions as to how to respond to the 3M and DuPont class settlement notices. All water providers may wish to consult with their legal and technical counsel. 

Background

Since 2018, lawsuits relating to PFAS in aqueous film-forming foam (“AFFF”) have been directed to an expansive multi-district litigation (“MDL”) in the U.S. District Court for the District of South Carolina (In re Aqueous Film-Forming Foams Products Liability Multi-District Litigation (No. 2:18-mn-02873-RMG)).[1] Among the over 5,600 cases pending in the MDL are approximately 400 cases brought by drinking water providers. Often situated near military bases, firefighting facilities, airports, and other sites where AFFF has been used, the water providers allege that PFAS manufacturers and various other defendants contaminated their drinking water. 3M and DuPont historically held two of the largest market shares for PFAS—the Plaintiffs’ Executive Committee (“PEC”) for the AFFF MDL estimates that since 1965 3M has controlled over 70% of the PFAS market, and DuPont 3–7%.[2]

In June 2023, 3M and DuPont reached separate settlement agreements with the PEC. By design, the agreements are meant to resolve nearly all PFAS-related claims involving drinking water brought by U.S. water providers against those manufacturers, as well as the majority of any claims that could be brought in the future. If the court grants final approval to the agreements, 3M would pay $10.5–12.5 billion to eligible claimants over a 12-year period, and DuPont would pay $1.185 billion—after certain substantial deductions for costs like attorney fees. Despite these large potential payouts, some observers have noted that these amounts would cover only a fraction of the nationwide cost of remediating PFAS-contaminated drinking water.[3]

Although the MDL includes over 400 water-provider plaintiffs, there are more than  12,000 water suppliers identified that would be bound by the settlements as “classes” defined in the agreements. Members of the proposed settlement class are categorized in two “phases”: Phase One comprises those water providers that have already detected PFAS in their drinking water supplies; Phase Two comprises those that lack known PFAS detections but either must test for PFAS under EPA regulations by the end of 2025 or serve over 3,300 people. Some water suppliers may know very little about the ongoing litigation. Some may not know whether there is PFAS in their water supplies. Few if any know what claims they may face from government regulators, their customers, neighbors, or other third parties in the future. Nevertheless, all settlement-eligible water suppliers who do not “opt out” of the proposed settlement will be bound by the agreements, including the agreements’ release of their claims.

Procedure for Settlement Approval

Proposed class settlement agreements must generally follow the below rules:

• Preliminary approval: The plaintiffs seeking a class settlement must propose an agreement for the court’s review and demonstrate that the agreement is facially “fair, reasonable, and adequate” such that the notice and approval process should be started in earnest.[4] There is an opportunity at this stage to object, as discussed below. The court approved both the 3M and DuPont settlements preliminarily in late August. Its preliminary approval of the 3M settlement came after negotiations that resulted in several amendments to address various concerns that had been raised by states, territories, and water providers regarding the original agreement.[5]
• Conditional certification of a settlement class: The court must then make a preliminary determination that a class could be certified under the applicable criteria of numerosity of parties, commonality of questions of law or fact, typicality of claims and defenses, and whether the proposed class representatives would fairly and adequately protect class interests.[6] The court also conditionally certified classes for the 3M and DuPont settlements late last month.
• Notice to class: If a court preliminarily approves the agreement and conditionally certifies a class, it will order delivery of notice to the class, which must provide comprehensive information on the case, the class to be certified, the claims at issue, the right to object and opt out, and the binding effect of the settlement agreement on all class members who do not opt out.[7] The DuPont and 3M notice periods have already begun.
• Objection and opt-out period: The notice specifies deadlines by which class members must object to final approval (i.e., alert the court to problems with the fairness or adequacy of the settlement) or opt out (i.e., forego settlement and continue litigating against 3M and/or other PFAS manufacturers). Those deadlines fall in November and December of this year for both settlements, as detailed below.
• Final approval: Finally, the court will hold a hearing and determine whether the agreement is fair, reasonable and adequate, with consideration to the substantive and procedural fairness of the agreement.[8] In the AFFF MDL, those hearings will occur in December 2023 (DuPont) and February 2024 (3M).

What’s Coming

The following are important upcoming deadlines for the 3M and DuPont settlements:

3M:[9]

• September 12, 2023 (or earlier): Putative class counsel began mailing settlement notices to water providers, including every water provider in the U.S. with over 3,300 connections.
• November 11, 2023: Deadline for water providers to object.
• December 11, 2023: Deadline for water providers to opt out.
• February 2, 2024: Final fairness hearing.

DuPont:[10]

• September 5, 2023 : Putative class counsel mailed settlement notices to water providers, including every water provider in the U.S. with over 3,300 connections.
• November 4, 2023: Deadline for water providers to object.
• December 4, 2023: Deadline for water providers to opt out.
• December 14, 2023: Final fairness hearing.

If the court finally approves either settlement agreement, the deadlines to file claims will begin 60 days after the time to seek appellate review of the court’s order granting final approval expires.[11]

What Do Water Providers Give Up, and What Do They Get?

From a water supplier’s perspective, the choice as to whether to participate typically involves three broad questions: First, how much money do we need, if any, to treat our water for PFAS, and what is the universe of funding available? Second, what would we be giving up if we participate in the settlements? Third, how much money might we get from the settlements?

Answering each question requires information that depends on the individual circumstances of each potential class member. But possible considerations include:

• The scope of released claims;
• The differences between the releases in the 3M and DuPont settlements;
• Adequacy of the settlement amount;
• Other potential sources of PFAS treatment funds; and
• Individual settlement award allocations.

For more information, as mentioned, please request a copy of our more comprehensive analysis of the settlement agreements here.

Conclusion

Water providers will soon receive class settlement notices that they will be forced to act upon as soon as early November, implicating a host of complex considerations. Marten Law represents a number of water providers, some of which are plaintiffs in the AFFF MDL. For more information about how the proposed settlements may impact any individual water provider, please contact any of our attorneys below.

• Jessica Ferrell, Marten Law, 206-292-2636, jferrell@martenlaw.com
• Jeff Kray, Marten Law, 206-292-2608, jkray@martenlaw.com
• Victor Xu, Marten Law, 503-329-6043, vxu@martenlaw.com