3M Proposes $1 Billion Earplug Lawsuit Settlement Fund as Part of Aearo Subsidiary Bankruptcy

While facing hundreds of thousands of earplug lawsuits filed by former military service members left with hearing damage, 3M Company is attempting to place it’s Aearo Technologies subsidiary into bankruptcy, and indicates that it will establish a $1 billion settlement fund, which has already been dismissed by veterans and their lawyers as woefully inadequate compensation to resolve the litigation.

Between 2004 and 2015, all military service members were provided 3M Combat Arms ear plugs, which were originally developed by Aearo Technologies, before it was acquired by 3M Company in 2008.

Although service members reported that the earplugs were too small and failed to adequately seal the ear canal, the company continued to promote the dual-ended earplugs as safe and effective ear protection during training and deployment.

Nearly 250,000 veterans have already filed lawsuits over the 3M earplugs, and the company has been hit with millions in damage awards during a series of early trial dates held over the past year, increasing pressure on the company to reach an earplug settlement that would resolve the litigation. However, a growing number of new claims continue to be brought by former service members and estimates have suggested that 3M Company may be liable for tens of billions in damages if each individual case goes before a jury.

While directing the parties to prepare three large “waves” of 500 cases each for trial, the U.S. District Judge presiding over the litigation ordered the parties to engage in a multi-day mediation to discuss potential earplug lawsuit settlements this month, in hopes of avoiding the need to flood U.S. District Courts nationwide with individual cases that would need to go before a jury.

After failing to reach an agreement to resolve the cases with plaintiffs, 3M Company issued a press release this week, announcing that it will place it’s wholly-owned subsidiary Aearo Technologies into Chapter 11 bankruptcy, as part of an action 3M believes will lead to “efficiently and equitably” resolve all claims determined to be entitled to compensation.

As part of the bankruptcy filing, 3M Company indicates it has committed to fund a $1 billion earplug lawsuit settlement fund, based on analysis by an “experienced estimator” of the value of the claims in chapter 11.

According to the press release, 3M and Aearo currently face 115,000 filed product liability claims, with an additional 120,000 claims on the administrative docket. Therefore, the company is only proposing an earplug settlement fund that would provide an average of less than $5,000 to each veteran claiming they were left with permanent hearing or tinnitus from the defective design of the earplugs.

The proposed fund to settle the earplug lawsuits has already been dismissed as woefully inadequate in a number of statements issued by plaintiffs lawyers, who are expected to challenge the bankruptcy filing, since the parent company 3M has a market cap in excess of $76 billion and generated $35 billion in sales last year.