Tuesday, May 21, 2024
    HomeBusiness3M Says It Will Pay $6 Billion to Resolve Combat Earplug Lawsuits

    3M Says It Will Pay $6 Billion to Resolve Combat Earplug Lawsuits

    3M, the chemical and manufacturing giant, said on Tuesday that it had reached a $6 billion settlement over claims that it sold defective combat earplugs to the U.S. military.

    The lawsuits were brought by military service members and veterans who claimed that the earplugs sold by 3M had led to hearing damage and tinnitus, a ringing sensation in the ears. 3M said it would pay $5 billion in cash and $1 billion in stock over the next six years as part of the settlement.

    The military used the earplugs, designed to protect service members from combat noise, from 2003 to 2015. Tinnitus rates among active-duty service members increased significantly from 2001 to 2015, according to a 2019 study.

    3M did not admit liability under the settlement. “The products at issue in this litigation are safe and effective when used properly,” the company said in a statement.

    Lawyers for the plaintiffs said in a joint statement, “This historic agreement represents a tremendous victory for the thousands of men and women who bravely served our country and returned home with life-altering hearing injuries.”

    3M’s share price jumped on news that a settlement was near, a sign that investors welcome the end of another one of the company’s major legal woes. The rally continued after the settlement was announced.

    For 3M and its shareholders, the cost of the settlement is “slightly more attractive” than initial reports suggested, according to a note by analysts at UBS. Spreading the cost over six years and paying part of it in shares, not cash, “could ease market concerns” about the effect on the company’s balance sheet and dividends, they added.

    In June, the company reached a $10.3 billion settlement with U.S. cities and towns over their claims that the company contaminated drinking water with perfluoroalkyl and polyfluoroalkyl substances, known as PFAS.

    Lawsuits over the earplugs started in 2016 when Moldex-Metric, an industrial supply company, filed a whistle-blower lawsuit claiming 3M sold earplugs to the U.S. military knowing they had defects. 3M agreed to pay the Justice Department $9.1 million in 2018 to settle those claims.

    About 230,000 suits were consolidated in a federal court in Florida in 2019. Individual plaintiffs generally have had success in trials, scoring multimillion-dollar awards. In May 2022, a federal jury in Florida awarded James Beal, an Army veteran, $77.5 million in damages over his hearing loss and tinnitus.

    Carl Tobias, a law professor at the University of Richmond, said 3M had “negotiated very well” if the settlement was approved by the court. He noted that the thousands of dollars each plaintiff would be entitled to would be significantly less than the multimillion-dollar awards individual plaintiffs had secured.

    The consolidated settlement followed several attempts by 3M to avoid payment.

    3M sought protection from liability as a federal contractor, an argument that was rejected because Aearo Technologies, 3M’s subsidiary and the maker of the earplugs, did not have a contract with the government.

    Aearo filed for bankruptcy in 2021 in an attempt to limit its liability from the lawsuits. An Indiana bankruptcy judge dismissed the move in June, saying the company was financially stable and did not need bankruptcy relief.



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