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3M to pay $6 billion to settle military earplug hearing loss claims

The Minnesota chemical manufacturer agreed to pay out cash and company stock to hundreds of thousands of military service members who were issued its subsidiary's earplugs.

ST. PAUL, Minn. (CN) — Minnesota manufacturing giant 3M announced a $6 billion settlement Tuesday morning with over 200,000 military service members who have claimed to suffer hearing loss after using the company’s earplugs. 

The agreement, to be paid out through 2029, includes $5 billion in cash and $1 billion in 3M stock. It would settle all current and future claims against 3M and its subsidiary Aearo Technologies, including ongoing multi-district litigation in Florida and a Minnesota state court action.

Aearo, which was acquired by 3M in 2008, sold its Combat Arms earplugs to the U.S. military from 1999 through 2015. The earplugs were standard issue hearing protection for service members during that time, and claims against the company started pouring in shortly afterward, with service members alleging the company had hidden design flaws and failed to properly instruct them on the earplugs’ proper use.

In 2019, a federal judge consolidated hundreds of thousands of suits into a multi-district litigation action in Pensacola, Florida. 

Since then, 3M lost 10 of the 16 bellwether cases that went to trial. Juries awarded about $265 million to 13 plaintiffs. Another such trial was scheduled to begin next month in Minnesota state court.

An effort to resolve earplug claims in bankruptcy court last year did not fly with an Indiana federal judge, who found that Aearo’s status as a subsidiary of 3M meant that it had no impending risk of insolvency and that a settlement could feasibly be reached outside of bankruptcy proceedings. 

3M, based in the St. Paul suburb of Maplewood, told investors Tuesday that the settlement was not an admission of liability.

“The products at issue in this litigation are safe and effective when used properly,” the company said in a statement. “3M is prepared to continue to defend itself in this litigation if certain agreed terms of the settlement agreement are not fulfilled.” 

The company's investors breathed a figuratively audible sigh of relief Monday and Tuesday upon learning that a settlement was coming: Company stock saw an approximately 7% jump between Monday morning and Tuesday morning.

While the $6 billion settlement is colossal, some analysts estimated that the company could be liable for as much as $10 billion in earplug litigation. 

The end of litigation over its earplugs — one of the largest mass torts in U.S. history, at one point accounting for about 30% of all federal court cases nationwide — would be a boon to the Scotch Tape and Post-It manufacturer, but 3M has other irons in the litigation fire.

3M is still awaiting court approval of its $10.3 billion settlement with cities and public water agencies whose water systems have been impacted by polyfluoroalkyl substances, carcinogenic “forever chemicals” the company introduced for use in firefighting foam, clothing and nonstick cookware. 

Several state attorneys general have opposed that settlement, arguing its indemnifications of 3M are too broad and that it does not do enough to protect drinking water in the future; however at 3M’s investor conference call Tuesday, 3M Executive Vice President Kevin Rhodes said that those attorneys general had agreed to withdraw their objections after further negotiation.

3M also faces claims related to its subsidiary Arizant Healthcare's Bair Hugger forced air warming device, which some patients have claimed was defectively designed such that it introduced contaminants into their surgical wounds.

Categories / Business, National, Personal Injury

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