3M blocked from shifting combat-earplug liability to unit in bankruptcy

3M can’t shift responsibility for more than US$300 million in damages awarded to veterans over defective combat earplugs to a unit that filed for bankruptcy, a judge ruled.

US district court judge M Casey Rodgers in Florida on Thursday (Dec 22) sanctioned 3M by ordering it to accept all liability for the faulty ear protection. She said 3M attempted to switch its litigation position in bad faith after almost four years of legal wrangling over more than 230,000 lawsuits involving the products.

That legal flip — in which 3M argued its Aearo Technologies subsidiary had sole responsibility for the earplug liability all along — amounted to a “brazen abuse of the litigation process”, Rodgers said in 22-page ruling.

The ruling is just the latest bad news about earplugs for 3M, which analysts say faces more than US$7 billion in liabilities over the faulty products. More than a dozen juries have found veterans’ hearing loss was tied to the defective earplugs and ordered the company to pay more than US$300 million in damages. 3M also has won six defence verdicts in so-called test trials.

Officials of St Paul, Minnesota-based 3M said in a statement Thursday they disagreed with Rodger’s “incomplete and inaccurate depiction of our good-faith efforts in this litigation” and vowed to appeal.

“3M’s litigation abuses have delayed justice for far too long to the hundreds of thousands of veterans suffering from hearing damage due to its conduct,” veterans’ lawyers countered in an emailed statement Thursday hailing Rodgers ruling. The plaintiffs asked the judge to punish 3M for its flip on the liability issue.

3M put its Aearo subsidiary into Chapter 11 in Indianapolis in July in hopes of facilitating quicker and cheaper settlements of the earplug suits. Other companies facing mass-tort litigation — including Johnston & Johnson and Purdue Pharma LP — are relying on similar bankruptcy filings to deal with their litigation woes in that forum rather than through state- and federal-court trials and settlements. Both cases tied to J&J’s and Purdue’s bankruptcy gambits are on appeal.

The tactic relies on a bankruptcy judge agreeing to put all litigation on hold while the company negotiates with lawyers for injured consumers. In 3M’s case, however, the judge overseeing Aearo’s bankruptcy refused to stay trials over the earplugs. Rodgers has said she’ll push ahead with more trials.

3M has been critical of Rodgers, arguing in court filings some of her rulings made it impossible to defend itself. Rodgers blocked one of 3M’s potential defences that as a contractor producing products for the government it couldn’t be sued. She then refused to allow the company to immediately appeal that decision.

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The company’s effort to shift legal arguments on Aearo’s liability for the earplug cases after taking an opposite view for more than four years into the multi-district litigation opened the company up for sanction, Rodgers said.

“Scorched-earth battle was waged against every theory of liability alleged in this litigation, yet there was nary a whisper that Aearo, and not 3M, was the only proper target, or even a target at all” until the company began losing test cases, the judge noted. “3M’s bad-faith conduct has been and continues to be, highly and unfairly prejudicial” to veterans suing over hearing loss. BLOOMBERG