3M Agrees to $6 Billion Settlement Over US Military Earplugs That Allegedly Caused Hearing Loss

Katabella Roberts
By Katabella Roberts
August 30, 2023Businessshare
3M Agrees to $6 Billion Settlement Over US Military Earplugs That Allegedly Caused Hearing Loss
The 3M logo at its global headquarters in Maplewood, Minn., on March 4, 2020. (Nicholas Pfosi/Reuters)

3M has agreed to pay $6 billion as part of a settlement with individuals allegedly harmed by earplugs produced by its subsidiary Aearo Technologies, after military veterans and service members said the devices resulted in hearing loss.

In an Aug. 29 statement, 3M said it would pay out the $6 billion—comprised of $5 billion in cash and $1 billion in 3M common stock—over six years, starting in 2023.

The Minnesota-based company noted the settlement is “not an admission of liability,” adding that all the products at issue in the litigation are “safe and effective when used properly.”

It stressed that “3M is prepared to continue to defend itself in the litigation if certain agreed terms of the settlement agreement are not fulfilled.”

The combat earplugs at the center of the settlement were made by Aearo Technologies, a company acquired by 3M in 2008. They were used by the U.S. military in training and combat from 2003 to 2015, including in Afghanistan and Iraq.

However, more than 230,000 military veterans and service members alleged the company had sold defective earplugs that resulted in hearing loss and tinnitus, or ringing or other noise in one or both ears.

In their lawsuits, plaintiffs claimed the company hid design flaws, messed up test results, and did not provide instructions for the proper use of the earplugs, which led to hearing damage on the battlefield or during military training exercises.

Failed Bankruptcy Attempt

The lawsuits against 3M and Aearo represent the largest-ever multi-district litigation in U.S. history, with nearly 330,000 cases filed and nearly 260,000 pending cases, and consolidated before U.S. District Judge M. Casey Rodgers in Pensacola, Florida, federal court in 2019.

Some analysts have estimated the company’s potential liability from the earplug litigation to be as much as $10 billion.

Earlier this year, 3M attempted to place Aearo Technologies into Chapter 11 bankruptcy, in the hope of shielding itself from the lawsuits, but a federal judge rejected that move.

“This agreement, reached through the mediation process that 3M has previously disclosed, is structured to promote participation by claimants and is intended to resolve all claims associated with the Combat Arms Earplug products,” 3M said. “The agreement includes all claims in the multi-district litigation in Florida and in the coordinated state court action in Minnesota, as well as potential future claims.”

“The Florida and Minnesota courts are entering orders to support implementation of the agreement,” it added.

3M said the settlement will result in an approximately $4.2 billion pre-tax charge for the third quarter of 2023.

‘Just and Deserved’ Compensation to Veterans

Following the announcement, Bryan Aylstock, the court-appointed lead plaintiffs’ counsel, told CNBC in an emailed statement that he was confident the $6 billion settlement “will receive full and overwhelming support, not just because it holds 3M accountable, but more importantly, because it provides just and deserved compensation to our veterans.”

The latest settlement comes just days after 3M said it had agreed to pay more than $6.5 million to resolve charges that its Chinese subsidiary paid nearly $1 million to fund at least 24 trips for Chinese officials from state-owned health care facilities, and their spouses, to cities in the United States and Australia in an effort to boost company sales.

The trips, paid for by 3M-China Ltd., included various entertainment activities such as guided tours, shopping visits, and day trips, according to the Securities and Exchange Commission (SEC).

The activities were “designed to improperly induce the Officials to purchase 3M products,” and 3M “violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act,” according to the SEC.

In June, 3M reached a tentative $10.3 billion deal with several U.S. public drinking water systems to resolve allegations of contamination of per- and polyfluoroalkyl substances, also known as PFAS or “forever chemicals,” as they do not break down easily in the environment.

However, the company is still facing thousands of lawsuits alleging PFAS water contamination that were not part of that settlement, including in the Netherlands and Belgium.

In order to fund its multiple settlements, 3M has cut costs, including by slashing roughly 8,500 members of its workforce this year, CNBC reported.

3M’s shares were up nearly 2 percent as of early morning Wednesday.

Reuters contributed to this report.

From The Epoch Times

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