KATIE TONKINSON—In 2008, the 3M Company (“3M”), an American multinational conglomerate operating in the fields of industry, worker safety, health care, and consumer goods, acquired Aearo Technologies LLC (“Aearo”). Aearo developed the Combat Arms Earplugs in 1998 with the dual-purpose of providing hearing protection and communication capabilities for military personnel. One end created a tight seal to block out the loud noises of combat, and if the user inserted the other end, he or she could hear nearby conversations while still obtaining hearing protection. Aearo sold these earplugs to the government, using the tagline, “You Protect Us. We Protect You.” In 2000, Aearo shortened the earplug design by a quarter of an inch. When Aearo made this change and tested the new design, it observed that the earplugs were too short to fit all users without additional manipulation and could loosen themselves after being inserted. The Combat Arms Earplugs, Version 2 (“CAEv2”) had the same problem. 3M claimed that Aearo “clearly communicated this issue to the military.” In a 2019 deposition, however, a division scientist who worked for 3M revealed that he had “no ‘paper documentation’” that Aearo or 3M warned the government of the loosening defect.
After numerous soldiers complained that the CAEv2 earplugs were ineffective, the U.S. Military terminated its contract with 3M in 2015. On behalf of the U.S. Government as a whistleblower, Moldex-Metric, Inc., filed a lawsuit against 3M in 2016, alleging that 3M violated the False Claims Act by improperly manufacturing and testing the CAEv2 and knowingly selling the defective earplugs to the Government. In 2018, 3M reached a settlement agreement with the United States in which 3M denied all of the allegations in the complaint and agreed to pay the United States $9.1 million. In January 2019, military veterans who suffered auditory ailments from using the CAEv2 earplugs during their service filed the first personal injury lawsuits against 3M. Two months later, hundreds of cases were consolidated in the Northern District of Florida as a multidistrict litigation (“MDL”) lawsuit. Of these cases, several were selected as “bellwether” cases and set for trial in spring 2021. A “bellwether” case is used to test the trial stage in mass tort MDL cases in which hundreds or thousands of plaintiffs claim the same injury from the same defendant. These trials provide a sample of verdicts that help guide the settlement payouts that other plaintiffs may receive.
Out of the sixteen completed “bellwether” trials, the courts ruled in favor of plaintiffs in ten and in favor of 3M in six. Damages varied from $1.7 million to the highest award of $77.5 million. With thousands of active cases possibly heading to trial in 2023, 3M risks losing billions of dollars in damages and faces mounting pressure to settle. However, settlement negotiations in July and September of 2022 failed to produce a settlement agreement, and 3M cancelled the settlement negotiation that was scheduled for October. In November, Judge M. Casey Rodgers of the Northern District Court of Florida ordered that settlement negotiations must continue.
Adding to the complexity of the MDL proceedings, Aearo filed for bankruptcy on July 26, 2022 in the U.S. Bankruptcy Court for the Southern District of Indiana. As a result of Aearo’s bankruptcy, the CAEv2 lawsuits have been automatically stayed. 3M planned to reserve $1.2 billion in a bankruptcy trust to hold for the plaintiffs in the MDL lawsuits. When spread across the estimated 230,000 cases, this payout would only award around $5,000 to each victim suffering lifelong hearing damage. Although 3M intended to settle the CAEv2 lawsuits in bankruptcy, the U.S. Bankruptcy Court for the Southern District of Indiana held that the automatic stay from Aearo’s bankruptcy did not affect the CAEv2 cases, which could go forward outside of the bankruptcy courts. On October 12, 2022, a three-judge panel of the Seventh Circuit Court of Appeals granted 3M’s request for an expedited appeal, which has yet to be decided. Several plaintiffs filed a motion to partially lift the stay for cases in which the alleged harm occurred after 3M acquired Aearo.
On December 23, 2022, Judge Rodgers of the Northern District Court of Florida issued a scathing sanctions order, imposing the “harshest penalty” against 3M for its “bad faith” attempt to avoid liability by having Aearo file for bankruptcy. As part of the sanctions, 3M is precluded from “shifting blame to the Aearo defendants” as a controlling question of law that will apply to all cases in the MDL. 3M appealed this order, and on January 20, 2023, Judge Rodgers issued another order that ended the formal settlement procedures in the MDL. After this order, 3M made plans to continue defending itself in the MDL and pursue settlement discussions in the bankruptcy courts.
Most recently, on February 3, 2023, several plaintiffs have filed a motion to dismiss Aearo’s bankruptcy. This motion follows the Third Circuit’s dismissal of the bankruptcy of Johnson & Johnson’s subsidiary, who similarly filed for bankruptcy after thousands of cases were filed against Johnson & Johnson alleging that its talc products caused cancer. 3M states that dismissing Aearo’s bankruptcy would disrupt settlement negotiations and continues to deny the allegations over the CAEv2.
After sacrificing their hearing in their military service, the legal system cannot fail these service members. If Aearo manufactured and provided the military with defective earplugs, and withheld information about the quality of the product, 3M must be held accountable. However, while a settlement is the most likely outcome of this litigation, the estimated $5,000 that 3M has set aside for each plaintiff in the bankruptcy trust seems wholly inadequate to account for the lifelong difficulties that veterans will face from hearing loss. Whether the parties reach a settlement agreement in the bankruptcy courts or the claims are adjudicated in the MDL, a just outcome that appropriately compensates service members is imperative.