By Brendan Pierson
(Reuters) -3M has agreed to pay $6.01 billion to settle lawsuits by U.S. military veterans and service members who say they suffered hearing loss from using the company’s earplugs, the company and lawyers for the plaintiffs announced on Tuesday.
The deal comes after a failed attempt by 3M earlier this year to move the lawsuits, which had grown into the largest mass tort litigation in U.S. history, into bankruptcy court in the hope of limiting its liability.
About 240,000 people are expected to be eligible for the settlement, Chris Seeger, a lead lawyer for the plaintiffs, said at a press conference. 3M has the right to walk away from the deal if less than 98% of eligible claimants decide to take part, but Seeger said he was confident that threshold would be met.
The money will be paid out from 2023 to 2029, and $1 billion will be in the form of 3M stock, the company said in a statement. The Minnesota-based company said it was not admitting liability and that the earplugs “are safe and effective when used properly.”
“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,” Seeger and his co-lead attorneys, Bryan Aylstock and Clayton Clark, said in a joint statement.
3M’s shares were up more than 2% on Tuesday. They closed 5.2% higher on Monday on earlier reports that a settlement was imminent. Some analysts’ estimates of the company’s potential liability from the earplug litigation had been as high as $10 billion.
The Combat Arms earplugs were made by Aearo Technologies, a company 3M acquired in 2008. They were used by the U.S. military in training and combat from 2003 to 2015, including in Afghanistan and Iraq.
Plaintiffs in the lawsuits claim that the company hid design flaws, fudged test results and failed to provide instructions for proper use of the earplugs, leading to hearing damage.
The lawsuits were consolidated before U.S. District Judge M. Casey Rodgers in Pensacola, Florida, federal court in 2019. At its height, the litigation accounted for about 30% of all federal court cases nationwide.
Of 16 earplug cases that have gone to trial, 3M has lost 10, with about $265 million being awarded in total to 13 plaintiffs. Those verdicts are included in the $6.01 billion amount.
Aearo filed for bankruptcy in July 2022, with 3M pledging $1 billion to fund its liabilities stemming from the earplug lawsuits.
3M argued that the mass tort litigation was unfair because Rodgers had kept scientific evidence favorable to the company out of trials and allowed thousands of “unvetted” claims to swell the court’s docket.
However, a bankruptcy judge in June dismissed the bankruptcy, finding that Aearo was not in enough financial distress to justify it.
Monday’s settlement comes just two months after 3M announced a tentative $10.3 billion deal with a host of U.S. public water systems to resolve claims of water pollution by per- and polyfluoroalkyl substances, or PFAS, known as “forever chemicals.”
That deal is not yet final, but cleared one potential hurdle on Monday as 22 U.S. states and territories withdrew their earlier objections to it.
(Reporting Brendan Pierson in New Yorkk, Additional reprting by Kannaki Deka in Bengaluru; Editing by Alexia Garamfalvi and Bill Berkrot)
