3M Co. has tentatively agreed to pay more than $5.5 billion to resolve more than 300,000 lawsuits alleging it sold faulty combat earplugs to the US military, people familiar with the deal said.
The settlement could stave off a potentially much larger liability that 3M tried to curb through a controversial bankruptcy case that eventually collapsed. The amount is about half of the roughly $10 billion that some financial analysts predicted 3M would eventually have to pay due to allegations that the earplugs would not adequately protect service personnel’s hearing.
Bloomberg Intelligence had estimated the company’s potential liability to be as much as $9.5 billion, while analysts at Barclays put it at about $8 billion.
“It looks like 3M has negotiated a pretty good deal for themselves considering that this lawsuit has weighed on them for well over a decade,” said Carl Tobias, a law professor at the University of Richmond who teaches product liability cases.
A 3M representative said the company does not comment on rumors or speculation.
The deal would end a deluge of lawsuits facing the St. Paul, Minnesota company, as it faces thousands of other PFAS “forever chemicals” lawsuits that will likely cost several times more than resolving the earbud deal. 3M has lost 10 of 16 early tests with the earbuds to date, awarding more than $250 million to more than a dozen service personnel.
In the most recent lawsuit, a Florida jury ordered the manufacturer in 2022 to pay a US Army veteran James Beal $77.5 million in damages for his hearing loss from the earplugs. Beal, who tested guns for a period of four years starting in 2005, said he developed hearing loss and tinnitus, a buzzing or hissing sensation in the ears.
Read more: 3M Earplug judge orders mediation away from bankruptcy court
According to federal court records, the hundreds of thousands of lawsuits have been consolidated into a multi-district trial involving a Florida federal judge for information sharing and pretrial trial trials. In the lawsuits, current and former service personnel allege that 3M knew the earbuds were too short to work effectively and failed to alert the U.S. government or users or take steps to repair the product.
Under the terms of the settlement, the maker of popular consumer products such as tape and post-it notes would pay out the money over five years, the people said, asking for anonymity because they were not authorized to speak publicly about the agreement . . They said 3M’s board has yet to sign the deal.
3M had sought to limit its liability by having its Aearo Technologies unit seek Chapter 11 protection from creditors in 2021 to bring things together. Critics, including law professors and consumer advocates, cited the maneuver as an example of for-profit companies using the process as a shield without filing for bankruptcy themselves.
In June, a bankruptcy judge dismissed Aearo’s case, ruling that 3M was not in the kind of financial trouble that warranted using the bankruptcy system to handle lawsuits. Aero has appealed the ruling. A similar initiative by Johnson & Johnson to resolve cancer cases filed for bankruptcy because of their baby powder was rejected this year.
Read more: J&J Court loss weakens tactics used by 3M, Georgia-Pacific
As 3M’s bankruptcy strategy languished, company attorneys and service members sought a settlement in mediation required by the judge overseeing the earbud litigation, U.S. District Judge Casey Rodgers. Rodgers, who served in the military from 1985 to 1987, in May ordered 3M Chief Executive Officer Mike Roman to travel to Florida for negotiations.
According to the lawsuits, the earplugs had been faulty for a 12-year period beginning in 2003. In 2012, 971,990 tinnitus claims were filed with the U.S. Veterans Administration, government records show. Experts estimate that such claims are rising by 15% annually.
The earplugs agreement is not 3M’s first. In 2018, following a whistleblower lawsuit, the company agreed to pay $9.1 million to settle the U.S. Department of Justice’s civil allegations that it failed to disclose flaws it knew about to the military to make.
As for the eternal chemicals lawsuit, 3M has agreed to pay a whopping $12.5 billion to clean up U.S. drinking water supplies contaminated with the substances.
The earbud case is In Re 3M Products Liability Litigation, 19-md-2885, U.S. District Court, Northern District of Florida (Pensacola).