3M Co.’s $1 billion fund to resolve earplugs lawsuits will not be enough given the vast scale of the litigation that company is facing, according to Professor Carl Tobias of the University of Richmond’s School of Law.
“There needs, probably, to be more money, if they are going to make good on treating the plaintiffs fairly,” Tobias, who teaches product liability and torts, told MarketWatch.
3M Co.
MMM,
is facing claims related to its discontinued Combat Arms Earplugs version 2, which it sold to the U.S. military and consumers. Military service members have blamed the earplugs for causing problems such as hearing loss and tinnitus by inadequately blocking noise from the likes of aircraft and artillery.
The company says it is facing increasing litigation over the earplugs, including approximately 115,000 filed claims and an additional 120,000 claims on an administrative docket as of June 30, 2022.
“The math seems to suggest that $1 billion isn’t enough,” Tobias said. “All that has to go into the calculus – it does seem like they will go through $1 billion very quickly.”
On Tuesday 3M announced that its Aearo Technologies subsidiary and related entities have voluntarily filed for bankruptcy, a move designed to resolve litigation related to the earplugs. The subsidiaries have initiated chapter 11 proceedings seeking court supervision to help establish the 3M funded trust to “efficiently and equitably resolve all claims determined to be entitled to compensation,” the industrial company said.
See Now: 3M’s attempt to resolve earplug litigation ‘woefully underfunded’ says lead plaintiffs’ counsel
3M is not the first company to pursue this type of strategy, according to Tobias. Last year, for example, a Johnson & Johnson
JNJ,
corporate affiliate holding talc-related liabilities filed for chapter 11 protection. The company’s move came amid thousands of claims linking talc-based products to cancer.
The lead plaintiffs’ counsel in the earplugs litigation has slammed the level of funding proposed by 3M. “3M’s bankruptcy maneuver is further proof that they value their profits and stock price more than the well-being of veterans who fought and served our country,” said Bryan Aylstock of Aylstock Witkin Kreis & Overholtz, PLLC, in a statement Tuesday. “Considering that juries have ruled in favor of 13 out of 19 servicemembers whose cases went to trial and awarded nearly $300 million in damages, the trust to resolve earplug litigation claims is woefully underfunded and not the ‘efficient and equitable resolution’ that 3M is desperately pretending it is.”
Tuesday was a busy day for 3M, which also announced the planned spin off of its healthcare business and second-quarter results before market open.
3M’s stock closed up 4.9% at $140.75 on Tuesday. The S&P 500
SPX,
closed down 1.2%.
