Judge For Military Earplug Lawsuits Extends Deadlines Three Weeks After 3M Subsidiary Bankruptcy

Court questioned whether 3M was acting in good faith during court-ordered mediation and unilaterally cancelling depositions after it's Aearo subsidiary filed for bankruptcy

Following the controversial attempt by 3M Company to resolve thousands of military earplug lawsuits by placing its wholly owned subsidiary into bankruptcy, the U.S. District Judge presiding over the litigation has agreed to pause certain deadlines for only three weeks, and has raised questions about whether the company is acting in “good faith.”

Between 2004 and 2015, all U.S. military service members were provided 3M Combat Arms earplugs, which were intended to provide ear protection during training and deployment. However, nearly 250,000 veterans now indicate that they have been left with permanent hearing damage or ringing in the ears, claiming that the earplugs were defective and failed to properly seal the ear canal.

After losing 10 out of 16 early “bellwether” trials, which were designed to help the parties gauge how juries are likely to respond to certain evidence and testimony that will be presented throughout the litigation, the manufacturer announced last week that Chapter 11 bankruptcy has been declared by its Aearo Technologies subsidiary, which originally developed the earplugs.

Rather than continuing to litigate the claims, 3M is attempting to establish an uncapped $1 billion earplug settlement fund, which would be created to force resolution for all claims through the bankruptcy process.

3M Company Faces Approaching Trials In Military Earplug Lawsuits

3M Company acquired Aearo Technologies in 2008, and continued to market and sell the Combat Arms military earplugs to the U.S. government as safe and effective for years, exposing the parent company to liability that some experts have estimated will likely exceed $10 billion.

Given common questions of fact and law presented in the litigation, all claims filed over the 3M earplugs throughout the federal court system are centralized before U.S. District Judge Casey Rodgers in the Northern District of Florida, who has been presiding over coordinated discovery and early bellwether trials in a small group of claims. However, a steady flow of new claims continue to be filed by veterans left with hearing damage after receiving the 3M ear protection, including many who received earplugs after 2008, when they were sold exclusively by 3M Company.

In a recent filing for bankruptcy, 3M and Aearo argued that the earplug litigation has gone off the rails, resulting in questionable claims and alleging the entire MDL process has failed. As a result of the Aearo bankruptcy filing, 3M has indicated that all proceedings in the federal litigation should be stayed indefinitely.

However, Judge Rodgers was not buying into that claim at a show cause hearing (PDF) last Wednesday, when the Court indicated there was no automatic stay on proceedings before her. The Court noted that 45,000 cases have been dismissed in just the last five months, and Judge Rodgers openly questioned whether the bankruptcy filing was done in “good faith” and why such a filing by a wholly owned subsidiary should result in any delay for claims pending against 3M Company.

“The fact that 3M feels that this MDL is unfair given its size is not a reason for an appellate court to overturn lawfully entered judgments and certainly not a reason in my mind for a bankruptcy court, with all due respect to Chief Judge Graham and his court, but for a bankruptcy court to offer safe haven or bankruptcy protection to a perfectly solvent defendant, depriving over 200,000 plaintiffs of their right to have their case resolved by a United States District Court, wherever that may be,” said Judge Rodgers at the hearing.

When the bankruptcy petition was filed, 3M unilaterally canceled a number of depositions that were previously scheduled, some the same day. As a result, Judge Rodgers has issued an order requiring 3M to pay expenses associated with these cancellations, since no injunction or automatic stay was issued by the bankruptcy filing of the wholly owned subsidiary.

In a separate case management order (PDF) issued on July 29, Judge Rodgers did agree to a three week continuance of certain discovery deadlines in a large group of cases currently being prepared for trial, but indicated that the delay will not impact the ultimate deadlines for summary judgment motions and other pretrial motions.

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