Minneapolis, Minnesota – 3M Co. announced on Monday that the litigation settlement for its sale of potentially faulty earplugs to the military is expected to surpass the 98% participation threshold by the final registration date of March 25. As the maker of well-known products such as Post-it Notes, Scotch tape, N95 masks, and Command strips, 3M agreed last August to pay a total of $6 billion to resolve over 300,000 lawsuits. These lawsuits alleged that tens of thousands of individuals suffered from hearing loss and tinnitus after using the 3M earplugs. This case has become the largest mass tort in the history of the United States, surpassing even asbestos and opioid claims.
To meet the participation threshold, 3M chose to pay $1 billion in cash instead of stock. The company stated that the overwhelming support from over 250,000 eligible claimants who have selected to participate in the settlement, along with the dismissal of claims that do not meet participation or litigation requirements, is expected to resolve more than 99% of the claims in the litigation by the final registration date. In response to allegations made by military veterans, 3M has maintained that the earplugs function correctly when used with appropriate training.
The legal battle surrounding the earplugs involved four years of litigation and 16 trials. Plaintiffs argued that 3M sold defective CAEv2 earplugs to the U.S. military between 1999 and 2015. Aearo Technologies, a company acquired by 3M in 2008, also faced bankruptcy in 2022, prompting a negotiation for a settlement where 3M agreed to cover the costs.
This settlement represents another significant payout by 3M. In June of the previous year, the company agreed to pay up to $12.5 billion to resolve litigation related to drinking water contamination caused by PFAS chemicals, also known as forever chemicals. Despite these legal issues, 3M’s stock has remained relatively stagnant in recent months, falling 17% in the last year while the S&P 500 has gained 20%. In January, the company’s stock price dropped further after providing a guidance for 2024 that fell significantly below consensus estimates, overshadowing a fourth-quarter earnings report that exceeded expectations. Nonetheless, 3M is planning to spin off its healthcare business in the first half of this year.
As the March 25 final registration date approaches, 3M expects the settlement for the earplug litigation to meet or exceed the agreed-upon participation threshold. This resolution not only brings closure to thousands of individuals affected by hearing loss and tinnitus, but it also marks a significant financial commitment by 3M in its efforts to address the consequences of selling potentially faulty earplugs to the military.