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3M has reached a $6 billion legal settlement with more than 250,000 veterans who claim combat earplugs 3M supplied to the U.S. Army failed to protect them from hearing loss.
The company said Tuesday it will contribute $5 billion in cash and $1 billion in stock over five years to settle one of the largest mass tort lawsuits in U.S. history.
The U.S. conglomerate best known for its Post-it notes and scotch tape has previously tried to resolve personal injury cases through a complex bankruptcy plan. But in June, a U.S. federal judge rejected a bankruptcy filing by a 3M subsidiary, prompting the company to seek alternative strategies to handle the lawsuit.
The battle earbuds at the heart of the lawsuit are made by Aearo Technologies, a company 3M bought in 2008 for $1.2 billion. The earplugs were used by U.S. forces during training and combat operations in Iraq and Afghanistan between 2003 and 2015.
In a statement, 3M said the settlement was not an admission of liability and that earbuds are safe and effective when used properly.
The judge overseeing 3M’s litigation dismissed about 50,000 of as many as 300,000 claims and organized 16 key trials in an attempt to set the parameters for a global settlement within four years. Plaintiffs won 10 of the lawsuits, and juries awarded plaintiffs nearly $300 million.
If approved by a judge, the settlement under the civil court system would apply to more than 250,000 existing claimants, said Carl Tobias, a law professor at the University of Richmond. But unlike the agreement struck under the auspices of the U.S. Bankruptcy Court, it will not be binding on future claimants who sue 3M and meet the statute of limitations, as well as claimants who can prove that the earbuds caused hearing problems.
The $6 billion settlement was lower than some financial analysts had estimated that it could take as much as $3 million to as much as $10 billion to settle individual jury cases. The company said it will take a pretax charge of about $4.2 billion in the third quarter to cover the settlement.
The earbud lawsuit isn’t the only legal liability 3M faces. The company faces thousands of lawsuits alleging its products expose people to “forever chemicals” that don’t break down in nature or the human body over time.
Last week, 3M agreed to pay a $6.5 million fine to settle SEC charges that the company attempted to conceal payments to Chinese government officials for overseas travel and tourism activities in order to induce them to buy its products.
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