DuPont and three of its spin-off companies engaged in a corporate restructuring scheme to avoid per- and polyfluoroalkyl substances (PFAS) liability and related claims, California attorney general Rob Bonta alleges in a recent legal filing (PDF).
“Specifically, the companies entered into a memorandum of understanding (MOU) designed to shift the overwhelming majority of liabilities onto Chemours (the company with the least amount of assets) and to limit the liability of Corteva, New DuPont and Qnity,” Bonta says in an Aug. 6 press release.
This original MOU, as well as a follow-up MOU in 2025, “transferred valuable assets away from Chemours in a flagrant attempt to put them out of reach of creditors like California,” Bonta says. He alleges that this restructuring and passing on of liabilities to Chemours violates state fraudulent transfer laws that seek to prevent companies in financial trouble from unfairly transferring away assets, in this case to avoid paying liabilities related to PFAS.
If Bonta is successful, other states could add similar fraudulent transfer claims to current or future PFAS lawsuits, says Lindsey Simon, an associate professor of law at Emory University.
The legal filing, a second amended complaint, is part of Bonta’s existing federal lawsuit against DuPont and other PFAS manufacturers, originally filed in the Superior Court of California, County of Alameda, in November 2022, alleging that manufacturers were aware of the dangers of PFAS but continued to manufacture PFAS-containing products anyway, without warning the public.
DuPont has faced several lawsuits in recent years related to its production of, and subsequent alleged pollution from, PFAS-containing products, including a recent one brought by the New York attorney general.
“The DuPont Defendants cannot game the system by illegally moving assets out of reach, dodging liabilities for the harm they have caused, and calling it restructuring,” Bonta says in the press release. “I look forward to ensuring that these companies are held accountable for PFAS pollution and that their assets cannot be hidden behind corporate walls while their responsibilities are left behind.”
Like California with its updated lawsuit, other states, including New Jersey (PDF), have targeted parts of DuPont’s corporate restructuring that allegedly shield the company from some of its liabilities. The New Jersey lawsuit resulted in a $2 billion settlement with DuPont.
Starting in 2015, DuPont spun off its performance chemical, agricultural, and electronics divisions to Chemours, Corteva, and Qnity Electronics, respectively. All three spin-off companies also took on some of DuPont’s liabilities relating to PFAS, though Chemours took on the largest share, according to the California lawsuit.
Questions about DuPont’s reorganization
“Companies reorganize for valid reasons, all the time. Reorganization to streamline liabilities is not inherently bad,” Simon says. But the concern is that Chemours entered fraudulent deals with DuPont that may leave it without enough funds to pay out PFAS liabilities.
If Bonta proves there was fraud, Simon says, the state could unwind those spin-offs or halt future movement. “The fraud claims can help identify and protect assets that should be available to pay claims,” she adds.
Simon says that, depending on the outcome of the lawsuit, it could have implications for current and future PFAS lawsuits elsewhere in the country. If California is successful, other states could replicate these fraud claims, since every state regulates fraudulent transfers in some way. Still, fraud transfer claims are expensive and difficult to prove, Simon says. And based on previous PFAS lawsuits, a settlement is likely.
C&EN reached out to DuPont, Corteva, Chemours, and Qnity Electronics for comment and did not hear back by publication time.
