ST. PAUL, MINNESOTA — 3M (NYSE: MMM) has announced a resolution to the Combat Arms Earplug litigation with Aearo Technologies (Aearo) and 3M through an agreement reached with court-appointed negotiating plaintiffs’ counsel. The agreement outlines a total contribution of $6.0 billion to be disbursed between 2023 and 2029, comprising $5.0 billion in cash and $1.0 billion in 3M common stock.
“This agreement is not an admission of liability. The products at issue in this litigation are safe and effective when used properly. 3M is prepared to continue to defend itself in the litigation if certain agreed terms of the settlement agreement are not fulfilled.”
–3M statement announcing settlement on August 29, 2023
The case revolves around over 230,000 military personnel or veterans who alleged their hearing-related issues resulted from the use of malfunctioning earplugs knowingly supplied to the U.S. military by 3M.
The latest development comes after 3M’s subsidiary, Aearo, responsible for producing the earplugs, filed for bankruptcy protection last year—a move denied by U.S. Bankruptcy judge Jeffrey Graham in June—permitting plaintiffs to directly sue 3M.
‘Faulty Earplugs’ Caused Hearing Loss and Tinnitus?
The dual-ended ear plugs were designed to provide two levels of ear protection. One side was intended to block all noises like a traditional plug and the other was intended to protect the ears from gunfire and explosions, but still allow the users to communicate freely.
While 3M has asserted that the CAEv2 earplugs, designed in the late 1990s for versatile use in various combat scenarios, are not flawed when worn properly, the settlement signals a step towards amicable resolution.
A whistleblower lawsuit in 2016, accused 3M of being aware that the CAEv2 earplugs sold to the government between 2003 and 2015 did not meet the required military standards for ear protection. Although 3M paid $9.1 million to the Department of Justice to settle the matter without admitting liability, it was subsequently inundated with numerous individual complaints from veterans attributing their hearing impairments to the defective earplugs.
3M’s legal defense was based on the government-contractor principle, but was dismissed by the court due to the absence of a written contract between the U.S. government and Aearo regarding the earplugs’ design.
After further legal setbacks, 3M’s CEO, Michael Roman, and other executives were ordered into mediation.
Hearing-related problems constitute the top service-related disability among veterans, with over 1.3 million individuals receiving compensation for tinnitus in 2020. The occurrence of tinnitus among active duty service members increased from 1.8 to 6.8 per every 1,000 members between 2001 and 2015.
The U.S. Department of Veterans Affairs employs the largest number of audiologists and specialists in hearing and balance disorders nationwide.
Second Major Settlement this Year for 3M
This latest potential settlement adds to 3M’s history of significant payouts, including a recent $10.3 billion settlement for allegations surrounding hazardous “forever chemicals” used in its manufacturing processes, known as per- and polyfluoroalkyl substances (PFAS). The chemicals, while providing waterproof and non-stick properties, have been linked to health issues such as cancer, fertility problems, developmental defects, and other concerns.
The earplug lawsuits, which have been consolidated in federal court in Pensacola, Florida, make up the largest mass tort in U.S. history, with around 330,000 cases filed and approximately 260,000 still pending as of March, according to court statistics.
With attorney’s fees for the earplug lawsuits reaching a reported $466 million this year alone, 3M and its investors are eager to finally reach a settlement.
