Chemical and consumer product manufacturer 3M said Tuesday it has agreed to pay $6 billion to settle lawsuits from U.S. service members who say they experienced hearing loss or other serious injuries after using faulty earplugs made by the company.
The settlement, consisting of $5 billion in cash and $1 billion in 3M stock, will be made in payments that will run through 2029.
Hundreds of thousands of veterans and current service members have sued 3M and Aearo Technologies, a company that 3M acquired in 2008, over their Combat Arms Earplugs. The service members alleged that a defective design allowed the products — which were intended to protect ears from close-range firearms and other loud noises — to loosen slightly and allow hearing damage, according to Aylstock, Witkin, Kreis, & Overholtz PLLC, one of the law firms representing plaintiffs.
In an online summary about the litigation, the Florida-based law firm notes that 3M previously agreed to pay $9.1 million to settle a lawsuit on behalf of the government alleging the company knowingly supplied defective earplugs to the U.S. military. And since 2019, the firm added, 3M has lost 10 of 16 cases that have gone to trial — awarding millions of dollars to plaintiffs to date.
“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,” attorneys for the plaintiffs said in a joint statement.
The settlement was made without an admission of liability, the company said in its Tuesday announcement. 3M contends its earplugs “are safe and effective when used properly.”
In 2018, 3M agreed to pay $9.1 million to the U.S. government to resolve allegations by Moldex-Metric that the earplugs were defective, but it did not admit liability.
Tuesday’s agreement resolves another major legal case for 3M, a sprawling conglomerate that makes hundreds of products spanning dozens of industries. It is known for common household items such as Scotch tape and Ace bandages, as well as industrial components such as coatings and sealants. Its medical and orthodontic divisions make devices such as stethoscopes, as well as the preformed crowns that dentists use in root canals. Its N95 and KN95 masks became ubiquitous during the coronavirus pandemic.
The earplugs were used by the US military in training and combat from 2003 to 2015. Veterans accused 3M of selling defective earplugs that caused hearing loss and tinnitus, according to a 2021 Wall Street Journal report.
The earplugs were made by Aearo Technologies, a company 3M bought in 2008. Aearo tried filing for bankruptcy last year as a way to fund its liabilities and limit exposure. However, that was dismissed by a judge this summer because the judge said that “allowing an otherwise financially healthy debtor with no impending solvency issues to remain in bankruptcy … exceeds the boundaries of the court’s limited jurisdiction.”
3M (3M) said the agreement will result in an approximately $4.2 billion pre-tax charge for the third quarter of 2023. Shares closed 5% higher on Monday because investors were expecting the settlement to be significantly higher, the Journal reported.
In July 2018, the Department of Justice announced that 3M Company agreed to pay $9.1 million “to resolve allegations that it knowingly sold” the same ear plugs at the center of the current settlement, to the U.S. military without disclosing the defects.
“Government contractors who seek to profit at the expense of our military will face appropriate consequences,” said Chad A. Readler, acting assistant attorney of the department’s civil division.
On Tuesday, New York Attorney General Letitia James said that 3M agreed to make significant changes to the settlement terms — which, as reflected in a proposed court order, include extending the deadline for eligible water systems to review the settlement and removing uncapped indemnity in favor of 3M.
James, along with the other attorneys general, have now withdrawn their opposition, her office said. According to court records, the judge granted preliminary approval of the agreement Tuesday afternoon.
In a statement sent to The Associated Press Tuesday, a spokesperson for 3M said the company was pleased to have to clarified the agreement and see the attorneys’ general objections withdrawn — adding that the deal “will benefit U.S.-based public water systems nationwide that provide drinking water to a vast majority of Americans without the need for further litigation by or on behalf of public water systems.”
“As a number of veterans look at those bellwethers where the awards are as high as $200 million, they may look at the [$25,000] figure and decide it’s too low,” Tobias said.
In its news release, 3M said it is prepared to continue to defend itself through litigation “if certain terms of the settlement agreement are not fulfilled.”
The settlement is to be paid out over six years. It includes $5 billion in cash and $1 billion in stock, which is to be paid to plaintiffs based on a 10-day moving average price at the time it is issued, at which time it can be sold immediately, according to people close to the settlement discussions.
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