3M May Settle Lawsuits Over Defective Military Earplugs For Over $5.5 Billion, Report Says

Topline

The claims of hundreds of thousands of military service members who said they developed hearing loss or tinnitus by using defective earplugs knowingly sold to the U.S. military by 3M could be settled with a $5.5 billion payout, Bloomberg reported Sunday, ending a years-long legal dispute that led to a 3M subsidiary filing for bankruptcy protection.

This August 25, 2011 photo shows 3M headquarters in Woodbury, Minnesota.

AFP via Getty Images

Key Facts

3M has tentatively agreed to pay more than $5.5 billion over five years to resolve complaints from more than 230,000 military service members or veterans, said Bloomberg, citing people familiar with the deal.

The settlement news comes after 3M had its subsidiary Aearo, which manufactured the earplugs, file for bankruptcy protection last year—a judge later called the attempt a “brazen abuse of the litigation process” and allowed plaintiffs to sue 3M directly.

3M has said the CAEv2 earplugs, which were designed in the late 1990s so soldiers could carry only one set of earplugs in multiple types of combat, aren’t faulty unless they are worn incorrectly and 3M said it worked in “close coordination” with the U.S. military to develop the design.

When reached for comment about the reported settlement, 3M Communications Manager Sean Lynch told Forbes Sunday they “don’t comment on rumors or speculation.”

Key Background

3M competitor Moldex-Metric, Inc. in 2016 filed a whistleblower lawsuit against 3M claiming the company knew the CAEv2 earplugs it sold to the government between 2003 and 2015 did not meet the standards for ear protection required by the military. 3M agreed to pay $9.1 million to the Department of Justice to resolve the allegations without admitting liability, but what followed were hundreds of thousands of individual complaints from veterans who said they now believed the hearing loss or tinnitus they experienced while serving is the fault of the dual-sided CAEv2 earplugs. 3M tried to use the government-contractor defense, which allows companies to be protected if equipment made under a government contract is later found to be defective, but the court rejected the defense because there was never a written contract between the U.S. government and Aearo regarding the earplugs’ design. After a judge also rejected 3M’s attempt to protect itself from the claims using Aearo’s bankruptcy filing, it ordered 3M CEO Michael Roman and others into mediation.

Surprising Fact

The U.S. Department of Veterans Affairs is the largest employer of audiologists and hearing and balance disorder specialists in the country. The VA says hearing problems are the No. 1 service-related disability reported among veterans and 1.3 million were receiving compensation for tinnitus as of 2020. Between 2001 and 2015, the number of active duty service members with tinnitus grew from 1.8 per every 1,000 members to 6.8.

Big Number

$466 million. That’s how much 3M said it had spent in attorney’s fees in the earplug lawsuit as of January.

Tangent

This would mark the latest large settlement by 3M. In June, 3M agreed to a $10.3 billion settlement over claims dangerous “forever chemicals” used in its manufacturing have contaminated water systems. The chemicals—technically named per-and polyfluoroalkyl substances, or PFAS—are used in products because they have waterproof and non-stick properties, but they’ve also been known to cause cancer, decreased fertility, developmental defects and other health problems in those who ingest them. The money will be used to clean up water found to be contaminated with an unsafe amount of PFAS, which 3M plans to phase out of its manufacturing. 3M also agreed to pay more than $6.5 million on Friday to resolve charges from the Securities and Exchange Commission that its Chinese subsidiary convinced government officials to buy the company’s projects by bribing them with overseas travel, though the company did not admit to the SEC’s charges.