3M Must Face Earplug Hearing Loss Lawsuits, Despite Aearo Technologies Bankruptcy Filing

A federal judge has rejected 3M Company’s attempt to halt litigation from moving forward in thousands of earplug hearing loss lawsuits filed by military veterans, finding that the controversial decision to place its Aearo Technologies subsidiary into bankruptcy does not mean that cases against 3M Company should be halted.

3M Company faces more than 250,000 claims brought by veterans left with permanent hearing loss or ringing in the ears after using 3M Combat Arms earplugs during military service, each raising similar allegations that the earplugs were defective and failed to properly seal the ear canal.

Over the past few years, a series of early “bellwether” trials have been held to help gauge how juries are likely to respond to certain evidence and testimony that will be repeated throughout the litigation. However, after losing 10 out of the first 16 trials, with juries awarding millions in damages in the early test cases, 3M Company announced last month that Chapter 11 bankruptcy has been declared by its Aearo Technologies subsidiary, which originally developed the earplugs before it was acquired by 3M in 2008.

Although 3M has never denied during the litigation that it is jointly responsible for all liability associated with the earplugs, and the company has billions in assets available to settle the cases, the company argued the bankruptcy should result in a stay on all of the litigation, and the cases should be resolved through the U.S. bankruptcy system.

However, at a hearing on Friday, U.S. Bankruptcy Judge Jeffrey J. Graham refused to grant the full bankruptcy stay, indicating the litigation can continue against 3M despite the bankruptcy filing by Aearo. Judge Graham said Indiana’s bankruptcy laws, where the bankruptcy case is located, does not allow such a pause in the litigation in this case.

3M Earplug Litigation To Move Forward During Bankruptcy

Given common questions of fact and law presented in the litigation, all lawsuits over the 3M earplugs throughout the federal court system are centralized before U.S. District Judge Casey Rodgers in the Northern District of Florida, as part of an MDL, or multidistrict litigation.

After the Aearo Technologies bankruptcy filing, Judge Rodgers openly questioned whether 3M was acting in good faith, and only aggreed to a three week continuance of certain discovery deadlines current set in thousands of individual claims being prepared for trial.

While 3M officials say they will appeal the bankruptcy court’s ruling, experts indicate the decision puts tremendous pressure on the company to settle the lawsuits quickly. With this latest ruling, cases will continue to go before juries, where 3M has fared very poorly, unless a settlement can be reached, and 3M now has more incentive to settle than plaintiffs, putting the company at a disadvantage in settlement negotiations.

Wall Street analysts noted that, likely as a result of the decision, 3M’s stock value plummeted 10%.