Background

On Monday, 3M agreed to pay $6.01 billion to settle nearly 260,000 lawsuits by current and former U.S. military service members who claim they suffered hearing loss from using the company’s earplugs. This settlement comes after 3M’s unsuccessful attempt to move the lawsuits into bankruptcy court earlier this year to limit its liability. The majority of the money will be paid out over the next five years.

Earlier reports of an imminent settlement had caused a 5% rise in 3M shares on Monday. Some analysts estimated the company’s potential liability from the earplug litigation to be as high as $10 billion. However, representatives from 3M and the service members’ lawyers have not yet commented on the settlement.

The Earplug Controversy

The Combat Arms earplugs, which were made by Aearo Technologies and acquired by 3M in 2008, were used by the U.S. military from 2003 to 2015 in training and combat scenarios, including in Afghanistan and Iraq. Lawsuits claim that 3M concealed design flaws, manipulated test results, and failed to provide proper usage instructions, resulting in hearing damage for the military personnel.

The lawsuits were consolidated before U.S. District Judge M. Casey Rodgers in Pensacola, Florida federal court in 2019. At its peak, this litigation represented about 30% of all federal court cases nationwide.

Legal Battles and Settlement

Out of the 16 earplug cases that went to trial, 3M lost 10, with a total of $265 million being awarded to 13 plaintiffs. In July 2022, Aearo filed for bankruptcy, and 3M promised to contribute $1 billion to cover its liabilities related to the earplug lawsuits.

3M argued that the mass tort litigation was unfair due to the exclusion of scientific evidence favorable to the company and the inclusion of numerous unverified claims. However, a bankruptcy judge dismissed the bankruptcy in June, ruling that Aearo was not in sufficient financial distress to justify it.

This settlement comes just two months after 3M announced a tentative $10.3 billion deal with multiple U.S. public water systems to address claims of water pollution caused by per- and polyfluoroalkyl substances (PFAS), commonly known as “forever chemicals.” However, this agreement is currently facing opposition from 22 U.S. states and territories who argue that it does not hold the company accountable adequately.