By Gretchen Morgenson,
July 26, 2022.
Facing thousands of lawsuits from U.S. service members who said 3M earplugs failed to protect their hearing, the manufacturing giant announced it is committing $1 billion to a trust to resolve the suits — and that Aearo Technologies, the 3M unit that made the plugs, is filing for voluntary bankruptcy as part of the plan.
The announcement comes three years since the start of the service members’ litigation, which contends 3M’s Combat Arms earplugs were faulty. Since then, 3M has prevailed at six earplug-related trials and lost at 10; as of the most recent case, decided in May, 13 plaintiffs have won almost $300 million in judgments against the company. 3M has not paid out on those cases, instead choosing to appeal the verdicts.
As of June 30, there were nearly 250,000 earplug cases filed and outstanding, 3M said.
“We determined that taking this decisive action now will allow 3M and Aearo Technologies to address these claims in a way that is more efficient and equitable than the current litigation,” Mike Roman, 3M’s chief executive, said in a statement.
Previously, the company had said the product “was safe and effective to use when properly fitted and that 3M provided instruction to the military on the proper fitting and use.”
Lawyers representing service members characterized 3M’s move as inadequate. “The trust to resolve earplug litigation claims is woefully underfunded and not the ‘efficient and equitable resolution’ that 3M is desperately pretending it is,” Christopher Seeger, of Seeger Weiss LLP, said in a statement. “We expect to raise several arguments in the bankruptcy court as to why this petition should be denied.”
“3M believes each veteran’s hearing damage is worth less than $5,000,” said plaintiff Joseph Sigmon in a statement, after learning of 3M’s $1 billion trust. “Would 3M CEO Mike Roman want to lose his hearing in exchange for $5,000? Our fight has just begun, and 3M will regret taking on those who served our nation and defended the values 3M treats with such contempt.”
NBC News shed light on the earplug cases in May by interviewing Sigmon, a former field artillery specialist who served two tours of duty in the Army — Iraq in 2006 and Afghanistan in 2013. After Sigmon returned home to North Carolina from the battlefield, he said he started to notice a low and constant ringing in his ears; he was diagnosed with tinnitus. “I remember me and my buddies talking about the earplugs aren’t working,” Sigmon told NBC News. “When you would fire your rifle, you could still feel a pinprick in your ear.”
Service members are routinely exposed to noise levels up to 150 decibels in training and combat, according to experts.
The service members’ lawsuits followed a 2018 settlement 3M struck with the Justice Department, which alleged the company knowingly supplied the U.S. military with earplugs that were defective because they were too short to fit properly for all users. The government also contended that 3M failed to disclose the design defect to the military. 3M paid $9.1 million to settle the matter and did not admit wrongdoing.
3M bought Aearo in 2008 for $1.2 billion. The 3M tag line for the Combat Arms earplugs it sold to the U.S. military was: “You protect us. We protect you.”
Aearo, which made other products as well, devised an initial version of the Combat Arms product in 1998. It had two sides: One end was supposed to provide total hearing protection, while the other end allowed a user to hear conversations nearby.
In early 2000, documents from the lawsuits show, Aearo tested the earplugs and found that they were too short to fit all users properly and could loosen in place. The company determined that manipulating the plugs could provide a good fit, the documents show.
3M said Aearo “clearly communicated this issue to the military.” But plaintiffs point to a 2019 deposition produced in the litigation, in which a 3M division scientist who worked with the military on the earplugs said he had no “paper documentation” showing that the military was advised of the earplugs’ loosening problem.
In battling the earplug cases, 3M contended that its status as a government contractor protected it from liability for service members’ hearing losses. 3M’s lawyers acknowledged to NBC News that it had no traditional contract with the military for the Combat Arms earplugs. Instead, the company argued that if an agreement existed between the government and a manufacturer containing adequate specifics of what the military wanted in a product, that is effectively a contract and the company should be protected from litigation under the government contractor defense. Lawyers for the plaintiffs disputed this view.
Aearo Technologies made its filing in U.S. Bankruptcy Court for the Southern District of Indiana, which will supervise the case and the trust fund set up by the company. 3M said it was also committing $240 million to fund projected expenses related to the case, adding that it will provide “additional funding if required under the terms of the agreement.”
In a conference call with investors on Tuesday morning, CEO Roman said, “We want to do right for veterans.” But he also said 3M stands by the performance of the earplugs. 3M’s stock rose 6% on the news.
Gretchen Morgenson is the senior financial reporter for the NBC News Investigative Unit. A former stockbroker, she won the Pulitzer Prize in 2002 for her “trenchant and incisive” reporting on Wall Street.