In late July, 3M Co. announced that it intended to set aside roughly $1 billion to settle all remaining 3M dual combat earplug lawsuits. This proposed plan also included a stipulation in which Aearo Technologies, 3M’s subsidiary, filed for bankruptcy. The company planned to extend Aearo Technologies’ bankruptcy protections to halt over 290,000 lawsuits filed against 3M in MDL-2885. This announcement was met with fierce opposition as it would only leave service members with roughly $5,000 as compensation for the alleged hearing damage. However, on August 26, the bankruptcy judge ruled that cases against 3M may proceed parallel to Aearo Technologies’ chapter 11 bankruptcy.
3M Hoped to Safeguard Itself From Ongoing Litigation
With thousands of more claims expected in the coming months, 3M Co. argued that bankruptcy proceedings and an established trust would facilitate a speedier and fairer resolution to the ever growing lawsuits. Thousands of veterans have come forward and accused 3M’s Combat Arms Earplugs Version 2 (CAEv2) of causing hearing loss and tinnitus. Facing the largest mass tort in history, 3M continues to deny that its earplugs damaged service members’ hearing.
Aearo Technologies filed for bankruptcy in Indiana on July 26, 2022. Since bankruptcy protection freezes current litigation, 3M hoped that the subsidiary’s legal protection would apply to the parent company as well. This tactic resembles a similar move made by the pharmaceutical company Johnson & Johnson back in October. The company faces upwards of 30,000 claims that its talc-based products caused severe cancers like mesothelioma and ovarian cancer. J&J announced that it created a subsidiary business, LTL Management, and transferred all talcum powder litigation to LTL. Yet, only a few days later, the subsidiary promptly filed for bankruptcy, thus pausing lawsuits against J&J.
Judge Rules 3M Cannot Use Bankruptcy to Shield Itself from Lawsuits
Like Johnson & Johnson, 3M aimed to stay its litigation through its subsidiary’s bankruptcy filing. But bankruptcy Judge Jeffrey J. Graham stated that 3M will continue to handle lawsuits in conjunction with Aearo Technologies’ bankruptcy restructuring. Judge Graham ruled that the subsidiary’s bankruptcy proceedings did not manifest a legal need to protect 3M. Therefore, 3M will have to proceed with the hundreds of thousands of lawsuits for its allegedly defective earplugs.
On August 29, 2022, 3M filed an appeal in response to Judge Graham’s decision. A spokesperson for 3M claimed that handling these lawsuits individually is not conducive to fairly settling these claims. So far, 3M has lost 10 of the 16 bellwether trials amounting to nearly $300 million in verdicts for plaintiffs. More bellwether trials will proceed in light of Judge Graham’s decision to strike down 3M’s strategy. The next trial is set to take place on October 24, 2022.