3M agrees historic $6bn settlement over combat earplug lawsuits

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3M has agreed a $6bn legal settlement with more than 250,000 military veterans who claim combat earplugs it supplied to the US Army failed to protect them from hearing loss.

The company said on Tuesday it would contribute $5bn in cash and $1bn in stock over a five-year period to resolve one of the largest mass tort litigations in US history.

The US conglomerate, which is best known for making Post-it notes and Scotch tape, previously attempted to settle the personal injury case through a complex bankruptcy scheme. But in June, a US federal judge dismissed the bankruptcy of a 3M subsidiary, prompting the company to seek an alternative strategy to handle the litigation.

The combat earplugs at the centre of the litigation were made by Aearo Technologies, a company 3M acquired in 2008 for $1.2bn. The US military used the earplugs in training and in combat operations in Iraq and Afghanistan between 2003 and 2015.

3M said in a statement the settlement was not an admission of liability and that the earplugs were safe and effective when used properly. 

The judge overseeing the 3M litigation had dismissed about 50,000 of up to 300,000 claims and organised 16 bellwether trials to try to set the parameters for a global settlement over a four-year period. Plaintiffs had won 10 of these, and juries had awarded almost $300mn to claimants.

Carl Tobias, a professor of law at the University of Richmond, said the settlement agreed under the civil court system would apply to the more than 250,000 existing claimants if it was approved by a judge. But unlike an agreement hammered out under the auspices of a US bankruptcy court, it would not bind future claimants who sued 3M and satisfied statutes of limitations and who could prove that the earplugs caused their hearing issues.

The $6bn settlement is lower than some of the estimates forecast by financial analysts, which had estimated settling the personal jury cases could cost 3M up to $10bn. The company said it would take a pre-tax charge of approximately $4.2bn in the third quarter to cover the cost of the settlement.

The earplug litigation is not the only legal liability facing 3M. The company faces thousands of lawsuits alleging its products exposed people to “forever chemicals”, which do not break down in nature or the human body over time.

Last week, 3M agreed to pay a fine of $6.5mn to settle allegations made by the Securities and Exchange Commission that it tried to hide payments to Chinese government officials for overseas travel and tourism activities to induce them to buy its products.