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3M Agrees To Pay $6 billion To Settle Lawsuits Over U.S. Military Earmuffs

Bruno T
Latest News
August 29 2023 03:33AM

On Monday, 3M (NYSE:MMM) agreed to pay $6.01 billion to settle nearly 260,000 lawsuits brought by current and former members of the US military who claim to have suffered hearing loss due to the use of the company’s earplugs, according to a person familiar with the matter.

The settlement comes after a failed attempt by 3M earlier this year to transfer the lawsuits, which have turned into the largest mass tort litigation in US history, to a bankruptcy court in an effort to limit its liability.

The money will be paid primarily over the next five years, the person familiar with the settlement said.

3M’s shares rose 5% on Monday due to earlier reports that a settlement was imminent. Some analysts’ estimates of the company’s potential liability in the earplug litigation reached $10 billion.

A spokesperson for 3M and the military’s lawyers did not immediately respond to requests for comment.

The Combat Arms earplugs were manufactured by Aearo Technologies, a company acquired by 3M in 2008. They were used by US military personnel in training and combat from 2003 to 2015, including in Afghanistan and Iraq.

The plaintiffs in the lawsuits allege that the company concealed design flaws, falsified test results, and did not provide instructions for proper use of the earplugs, leading to hearing damage.

The lawsuits were consolidated before US District Judge M. Casey Rodgers in Pensacola, Florida federal court, in 2019. At its peak, the litigation represented about 30% of all federal lawsuits nationwide.

Of the 16 earplug cases that went to trial, 3M lost 10, with approximately $265 million awarded in total to 13 plaintiffs.

Aearo filed for bankruptcy in July 2022, with 3M pledging $1 billion to fund its liabilities arising from the earplug lawsuits.

3M argued that the mass tort litigation was unfair because Rodgers excluded favorable scientific evidence for the company from the trials and allowed thousands of “unassessed” claims to burden the court’s docket.

However, in June, a bankruptcy judge rejected the bankruptcy, concluding that Aearo was not financially troubled enough to justify it.

Monday’s settlement comes just two months after 3M announced a preliminary $10.3 billion agreement with a range of US public water systems to settle claims of water pollution by per- and polyfluoroalkyl substances, or PFAS, known as “forever chemicals.”

This settlement is not final, and 22 US states and territories are seeking to block it, alleging that it does not adequately hold the company accountable.