Bankruptcy judge rejects 3M's plan to minimize earplug liability

Filing bankruptcy protection for its Aearo earplug subsidiary does not exempt 3M from 230,000 earplug lawsuits, a federal bankruptcy judge ruled Friday.

The decision by U.S. Bankruptcy Judge Jeffrey J. Graham in the Southern District of Indiana could have significant ramifications for how the earplug lawsuits against 3M will play out and how much the company eventually will pay out.

In one of the largest ever U.S. mass torts, about 230,000 U.S. military members and veterans allege faulty Combat Arms earplugs — made by 3M subsidiary Aearo Technologies — damaged their hearing.

3M said in a statement Friday that it's disappointed in the ruling and plans to appeal.

"Despite today's ruling, 3M continues to hope that all parties and their attorneys will come together to negotiate a prompt resolution to this matter, so that those veterans with eligible claims can be compensated sooner," the statement said.

Plaintiffs have already scored several victories in trials that have resulted in about $300 million in jury verdicts. In July, 3M announced it was putting its Aearo subsidiary into Chapter 11 bankruptcy protection and would set up a $1 billion trust fund to pay all claims. Stock analysts have estimated 3M's total liabilities could be into the tens of billions of dollars.

Retired Lieutenant Colonel Stephen Snyder, who called his hearing loss and tinnitus brutal, said he applauds the judge's decision.

"Today's ruling rejecting this cowardly bankruptcy ploy means 3M will also have to live with the consequences of its misconduct," Snyder said. "I applaud the judge's decision and eagerly look forward to my own day in court."

Earplug suits filed against 3M by military veterans were roped together in a "multi-district litigation" — or MDL — case. MDLs are used in the federal court system for complex product liability matters with many separate claims.

For several months, 3M defended itself in 16 bellwether trials that are aimed at setting some precedent to settle all the claims. Plaintiffs won 10 of them, with the last being in May.

Last month, 3M moved to escape the jurisdiction of U.S. District Judge Casey Rodgers' court in northern Florida, which had overseen the bellwether trails. The company put its Indianapolis-based Aearo subsidiary into Chapter 11 bankruptcy protection, saying the MDL process was "broken".

Rodgers, while approving a stay earlier this month until the Bankruptcy Court had ruled, sharply criticized the company's move as an attempt to dodge the process.

Chapter 11 shields troubled companies from creditors while finances are reorganized.

Aearo Technologies, named as a defendant in the avalanche of earplug cases along with 3M, tried to persuade Graham to extend the litigation freeze to 3M itself, thus allowing 3M to resolve the earplug cases through bankruptcy proceedings.

If Graham had ruled in favor of 3M, it likely would have lowered 3M's costs to settle the cases while avoiding thousands of jury trials in federal court.

Unless it wins its appeal, Maplewood-based 3M will now need to see the cases through.

3M bought Aearo in 2008, folding the subsidiary's earplug business into the parent company two years later. Aearo had developed an earplug, the Combat Arms CAEv2, that was standard issue for the U.S. military for many years.

The wave of lawsuits against 3M came after the company settled a government whistleblower suit regarding the earplugs in 2018. The whistleblower suit claimed Aearo knew about dangerous design defectsin its earplugs in 2000 before 3M bought the company.