- Published on 30 August 2022
Efforts by 3M to use a bankruptcy legal strategy to resolve extensive personal injury liability lawsuits through one big settlement have been blocked by a judge. The American international conglomerate is now appealing the decision.
More than 230,000 damage litigation claims have hit 3M from US armed service veterans who accuse 3M and its bankrupt subsidiary, Aearo Technologies, of selling faulty earplugs for combat use that damaged the hearing of service personnel.
To block these jury trials, which come from all over the USA, 3M put Aearo in bankruptcy in a ploy to benefit from polemical rules that have allowed some parent companies in past disputes to get trials halted so that a settlement can be negotiated for all the lawsuits. Similar strategies have had some success for other big groups, such as Purdue Pharma in its battle over the OxyContin opiod drug.
But US Bankruptcy Judge Jeffrey J. Graham ruled on Friday, August 26 that 3M cannot halt these lawsuits through bankruptcy, arguing that federal bankruptcy law in Indiana - where Graham was appointed - does not allow him to grant 3M's request. The judge said in his ruling that, if granted, a temporary halt would help 3M pressure soldiers into settling.
Billions in damages
Soldiers' lawyers are pushing to take their cases to courts, which would mean 3M fighting these many thousands of lawsuits individually. Bloomberg Law quotes an expert employed by the soldiers' lawyers as estimating 3M could face more than $100 billion in damages, a figure the company itself strongly disputes.
Under a negotiated agreement, 3M has proposed funding a $1 billion settlement trust to compensate a majority of the plaintiffs.
3M's appeal against Judge Graham's ruling will prolong a legal struggle that has many intricacies, one of them being dissonance between different branches of the federal judiciary. In another court district in February 2022, a judge ruled on a case involving Johnson & Johnson, allowing the group to play the bankruptcy card to resolve billions of dollars in claims that the company’s baby powder gave thousands of people cancer.
Source: Bloomberg Law