3M’s plan to escape 230,000 defective military earplug lawsuits with a $1 billion trust and bankruptcy protection for a subunit of the company that manufactured and sold the controversial earplugs to the U.S. military was rejected after a bankruptcy judge ruled that Chapter 11 restructuring for the subunit created no legal justification to protect the parent company from continued lawsuits.
Bankruptcy Judge Jeffrey J. Graham ruled August 26 that Aearo’s restructuring under Chapter 11 could proceed simultaneously while litigation against 3M continues. The move is unusual due to the fact that when bankruptcy protection is granted, litigation against the parent company is usually paused so that the subunit has adequate time to restructure.
3M claimed that its plan to establish a $1 billion trust would resolve litigation faster than if the claims were dragged out through the courts. But plaintiffs attorneys argue that the trust would be inadequate to resolve hearing loss and hearing damage claims. Some analysts said that $10 billion would be required for a settlement.
To date, 16 Combat Arms Earplug Version 2 (CAEv2) MDL bellwether trials have concluded. Juries in 10 trials found 3M liable for 13 veterans’ hearing damage and loss claims, and awarded those plaintiffs a collective $300 million.
The judge presiding over the federally-consolidated cases, Judge Casey Rodgers of the U.S. District Court for the Northern District of Florida recently ordered thousands more CAEv2 cases to prepare for trial, in what would be a second phase in bellwether multidistrict litigation trials. The first of those is scheduled for Oct. 24, absent a renewed settlement agreement or a successful appeal of bankruptcy judge Graham’s decision by 3M.
Lawyers for military veterans who claim that their hearing was damaged because of CAEv2, which was the only hearing-protection device available to military personnel between 2003 and 2012, said they looked forward to pursuing their claims against 3M at trial.
“Judge Graham’s decision is a complete rejection of 3M’s attempt to evade accountability and hide in bankruptcy,” plaintiff attorneys said in a statement, per Reuters.
Most veterans who have sued 3M over CAEv2 design defects served in the Iraq and Afghanistan wars.