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Will Aearo Bankruptcy Affect 3M Earplug Lawsuits?

On Friday, August 26, U.S. Bankruptcy Judge Jeffrey J. Graham denied Aearo Technologies’ efforts to temporarily halt 3M earplug lawsuits while Aearo pursues Chapter 11 bankruptcy. Judge Graham said that since 3M hasn’t filed for bankruptcy, the lawsuits will continue forward in multidistrict litigation (MDL). The ruling forces the company to face more than 230,000 claims from veterans that allege the earplugs cause hearing loss and hearing damage, including tinnitus.

Aearo said it would be appealing the decision shortly after it was announced. So far, plaintiffs have been unsatisfied with the compensation 3M and Aearo have offered during negotiations, indicating they’re ready to pursue trials unless offers become more reasonable.

3M company logo on headquarters building

If the recent ruling is upheld, plaintiffs will get their day in court with 3M unless a settlement is reached beforehand. It would allow veterans to hold 3M accountable for the alleged defective earplug design – a flaw that many lawsuits say 3M knew about yet continued to sell their faulty product to the military.

If the decision to stay the earplug lawsuits is overturned, hundreds of thousands of veterans that suffered hearing damage and loss after using 3M’s Combat Arms Earplugs Version 2 could have no choice but to take what’s approved during the bankruptcy proceedings. Aearo placed $1 billion in a trust for settlements after filing for Chapter 11 bankruptcy, but that amount seems lacking; it could be much, much less than what 3M would have to pay if the earplug lawsuits proceeded in mass tort litigation.

There’s been an outcry and significant criticism surrounding the transfer of liability to Aearo Technologies, a subsidiary of 3M, followed by the company’s almost immediate bankruptcy filing. Veterans suing 3M claim the company is trying to avoid paying what they should in widespread product liability lawsuits. Even U.S. District Judge M. Casey Rodgers, who’s overseeing the MDL, has questioned 3M’s bankruptcy strategy. She’s concerned that the company shifted to Aearo and filed for bankruptcy because of their displeasure over the results of 16 bellwether (test) trials that occurred so far. 3M lost 10 of those cases, and the damages awarded amount to over $265 million.

As of today, the 230,000 claims against 3M will proceed in litigation, and the product liability cases that have gone to trial demonstrated veterans’ success in proving the company’s negligence. While the ruling against Aearo’s request to temporarily stop earplug lawsuits from proceeding was seen as a win for plaintiffs, an appeal is coming – and it could worsen the already slow-moving lawsuits that were consolidated into multidistrict litigation back in 2019.

Why Did 3M Transfer Liability to Aearo and File for Bankruptcy?

In July, Aearo Technologies voluntarily took on the liability of 3M earplug lawsuits, then filed for bankruptcy. 3M claimed it would make it easier and quicker to resolve cases this way. They’ve said plaintiffs will get paid sooner and that it will avoid years of lengthy and costly individual lawsuits.

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However, 3M is not the first highly profitable company to seek shelter from an influx of lawsuits by using a bankrupt subsidiary. It’s a move that many see as unfair when the parent company’s resources could far exceed compensation awarded from a bankrupt company; often, the settlement amounts for victims are much less, and there’s a lack of accountability on the negligent party.

Given many test cases in the MDL proceedings ruled in favor of veterans who suffered hearing loss and/or tinnitus after using Combat Arms Earplugs Version 2, 3M could be financially crippled if Aearo doesn’t assume liability. After all, ten verdicts awarded more than $265 million in damages, and over 230,000 earplug lawsuits against 3M remain.

How Bankruptcy Could Affect 3M Settlements

Frequently, when someone is the victim of a company’s negligence, they don’t just want to be compensated for their injuries. They want to be heard, for the company to admit wrongdoing, and for the public to know about what happened. When Chapter 11 is used during mass tort litigation, it seriously limits and even outright prevents some of this from happening, leaving victims feeling that justice wasn’t served. Here’s how.

When a company files for Chapter 11 bankruptcy, plaintiffs do not get a trial by jury. Instead, the company proposes a settlement amount that must be approved in bankruptcy court, and the money is issued among plaintiffs.

Chapter 11 stalls pending litigation, allowing companies an alternate way of handling lawsuits if they are unhappy with the outcomes of MDL rulings, its process, and jury verdicts. The bankruptcy judge issues a bar date, which is essentially a deadline for victims to file a claim. Once the bar date passes, they cannot sue for their injuries.

These are some of the ways lawsuits are affected when the company they’re suing files for Chapter 11 bankruptcy. In the case of 3M, the recent ruling by the bankruptcy judge that denied Aearo’s attempt to halt lawsuits means that litigation can continue – unless an appeal overturns this decision.

Bankruptcy doesn’t always result in lower settlement amounts, but it is common. Given 3M earplug lawsuits consolidated to become the largest MDL in U.S. history, and the bellwether trials demonstrated how significant the awards could be, plaintiffs will no doubt continue to fight any moves made to avoid paying what’s deserved.

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It’s also important to note that the MDL judge blocked 3M from relitigating lawsuits that already reached a verdict; they can’t use bankruptcy to get out of past rulings.

About 3M Earplug Lawsuits

In 2018, 3M paid the U.S. government $9.1 million in damages following a whistleblower lawsuit about the defective design of its earplugs, but they didn’t admit any wrongdoing. A year later, following an influx of claims by veterans with hearing loss and damage, the 3M product liability lawsuits were consolidated into multidistrict litigation.

MDLs occur when lawsuits involve common questions of fact – similar claims and injuries. It’s intended to make pretrial proceedings easier and quicker, foster a more efficient discovery process, prevent inconsistent pretrial proceedings, and save resources for everyone involved. And with test trials during the MDL, both sides see how their arguments hold up in court. However, unlike in class action lawsuits, if no settlement is reached during the MDL proceedings, 3M earplug lawsuits will move forward individually.  

The Combat Arms Earplugs Version 2 were sold to the military from 2003 to 2015. Their design, which allowed them to be used in two ways, was ideal for military training and combat. The ends of the earplugs are different, giving the person using them the choice to have sound partially blocked while allowing voices to be heard or to block out all sound. Military servicemembers need earplugs to prevent hearing damage and loss, which is the most common disability among veterans.

But the 3M lawsuits allege their earplugs had a design flaw. Specifically, they weren’t long enough to provide the necessary seal within the ear canal to do what was intended. Now, hundreds of thousands of veterans that used these special earplugs have allegedly suffered tinnitus and hearing loss because they didn’t block the sound vibrations and loud noises they were supposed to.

Lawsuits claim that 3M knew there was a problem with the design but continued to sell the product anyway. Some of the earplug lawsuits also claim the company hid falsified safety test results and failed to provide proper instructions for use, causing injuries among those who used them. Since the beginning of these allegations, 3M has maintained its position that its earplugs are safe and argued that veterans didn’t use them properly.

For now, veterans with hearing loss and tinnitus that are suing 3M won’t be forced into taking a settlement from Aearo’s bankruptcy proceedings. These selfless individuals deserve to be compensated for injuries they suffered while bravely and selflessly serving the country.