It has been my privilege over the years to participate in insurance industry conferences and events, including conferences and events concerned with topics far outside my usual management liability insurance turf. One of the recurring themes that comes up in these industry events is the wide-spread concern about potential liability exposures associated with PFAS – the large group of synthetic chemicals often referred to as “forever chemicals.” There is already extensive existing litigation relating to companies’ manufacture, use, and distribution of PFAS, much of it relating to environmental and consumer product safety concerns.

Among the PFAS-related litigation risks that many companies may face, in addition to the environmental and consumer product PFAS-related litigation concerns, is the risk of PFAS-related corporate and securities litigation. As discussed below, there have already been PFAS-related securities class action lawsuits, and the possibility of further litigation of this type may represent a significant litigation risk for many other companies.

Background

As well explained in a February 2025 memo from the Covington & Burling law firm (here), the label PFAS (per- and polyfluoroaklyl substances) describes a group of over 15,000 synthetic chemicals used since the 1950 in a wide range of industrial and consumer product, largely due to the chemicals ability to resist heat, water, and oil. For example, PFAS are commonly used in nonstick cookware, waterproof clothing, firefighting foams, cleaning agents and paints, cosmetics and personal care products, and food packaging. The chemicals are often referred to as “forever chemicals” because of their persistence in the environment and the human body. The chemicals do not break down naturally and can accumulate over time in soil, water, wildlife, and people.

For a particularly disturbing account of how the pervasive and enduring environmental spread of PFAS was uncovered (while at the same time the information allegedly was suppressed), please refer to the May 2024 article in The New Yorker published in the print edition under the title “You Make Me Sick,” about one company’s involvement with the chemical, here.

There are ongoing debates about whether and to what extent PFAS chemicals present human health risks. However, litigants and others assert that PFAS exposure has been linked to a wide range of serious health conditions, including cancers, metabolic disorders, hormonal disruption, fertility issues, developments effects in infants and children, and other concerns.

PFAS-Related Litigation

There has already been extensive PFAS-related environmental and consumer product safety litigation. Just to cite a few examples of this type of litigation: in June 2023, 3M announced that it had agreed to a settlement with a present value of $10.3 billion, payable over 13 years, to provide remediation of contamination of public water supplies;  DuPont and several other companies agreed to pay $1.18 billion to settle similar water contamination claims; and thousands of lawsuits have been consolidated into a multidistrict litigation (known as the AFFF Firefighting Foam MDL) involving PFAS-related claims of firefighters, military personnel, and municipalities.

As summarized in a May 15, 2025 memo from the Thompson Coburn law firm (here), there has been extensive amounts of other PFAS-related litigation.

PFAS-Related Securities Litigation

In addition to this broad swath of environmental and consumer product safety litigation, there have also been PFAS-related corporate and securities lawsuits.

For example, as discussed here, in July 2019, a plaintiff shareholder filed a PFAS-related securities class action lawsuit in the District of New Jersey against 3M and certain of its executives. The gist of the complaint is the plaintiff’s allegation that the defendants engaged in a scheme to defraud investors by issuing false and misleading statements “to conceal the truth about the Company’s exposure to legal liability associated with its most lucrative product offerings: man-made chemicals known as per- and polyfluoroalkyl substances (PFAS).” In a September 30, 2021, order (here), the court granted the defendants’ motion to dismiss. Among other things, the court concluded that the plaintiffs had failed to allege a material misrepresentation and had failed to sufficiently plead scienter. (As far as I can tell, no appeal was filed.)

Similarly, as discussed here, in October 2019, a plaintiff shareholder filed a PFAS-related securities class action lawsuit in the District of Delaware against The Chemours Company. Chemours had spun out of DuPont in 2015. Chemours itself filed a 2019 Chancery Court lawsuit against DuPont alleging that the environmental reserves that DuPont had established for Chemours were “spectacularly” deficient. Among other things, Chemours asserted that the reserves DuPont had established for Chemours PFAS-related litigation exposures were inadequate. The subsequently filed securities lawsuit largely tracked the allegation that Chemours had raised in the Chancery Court lawsuit. The court in the securities court lawsuit granted in part and denied in part the defendants’ motion to dismiss. After the court’s dismissal motion ruling, the parties submitted a stipulation of dismissal, asking the court to dismiss the remaining claims with prejudice; the court granted the motion.

Discussion

Though I have been able to cite above to the existence of prior PFAS-related securities litigation, readers undoubtedly noticed that neither of the two cases I cited survived in any meaningful way past the motion to dismiss stage. Certainly, neither case resulted in any recovery for the claimants.

However, the fact that these cases were unsuccessful from the plaintiffs’ perspective by no means suggests that there could not be further PFAS-related litigation ahead. Indeed, from my perspective, the fact that these cases were previously filed suggests at least the possibility that there could be further PFAS related corporate or securities suits ahead, particularly given a number and seriousness of PFAS-related considerations.

As I see it, a number of considerations raise the possibility for further PFAS-related corporate and securities litigation: increasing global regulation, as well as at the state and federal level in the U.S., may require costly manufacturing and product formulations; companies continue to face to possibility for further lawsuits from consumers, municipalities, and other groups for alleged health and contamination effects; potential damage to brand and reputation as a result of association with PFAS; and the possibility for cleanup costs of contaminated sites and water supplies.

Given these various concerns, publicly traded companies may face significant challenges in their PFAS-related public disclosures. The nature and extent of these challenges is well-described in a May 8, 2025, Law360 article entitled “Addressing PFAS Risks in Public Company Disclosures” (here), written by attorneys from the Venable law firm.

As the authors note, litigation and regulatory developments surrounding PFAS continue to evolve, as a result of which “an increasing number of industries face heightened exposure to compliance risks, enforcement actions and costly legal proceedings.” Given these evolving risks, the authors note, “companies should regularly assess their potential impact on business operations and financial performance, and update their risk factors, MD&A disclosures and forward-looking statement safe harbor legends accordingly.”

I want to stress here the importance of these disclosure-related considerations. The fact is that PFAS may be found, as the law firm memo’s authors put it, “in an incredibly broad range of consumer and industrial products.” Potential PFAS-related risks could affect a significant number of companies, putting significant disclosure pressure on potentially affected companies. The risk for these companies is that their disclosures, and perhaps more importantly, their omissions, potentially could be the subject of hindsight scrutiny from plaintiffs’ lawyers in light of further developments in the evolving PFAS-related litigation and regulatory environment.

Bottom line for me is that, in addition to the other PFAS-related litigation and regulatory risks, companies potentially affected by PFAS exposure could also face the risk of potential PFAS-related corporate and securities litigation.

One final note. D&O insurance policies typically have environmental liability exclusions. However, if the policy provision is properly worded, the exclusion will have an express carve-out preserving coverage for shareholder claims or for claims alleging violations of the federal securities laws. The importance of this item in this context underscores the importance of a properly constructed D&O insurance policy, which in turn underscores the importance of companies have associating knowledgeable and experienced advisors in their D&O insurance placement process.