3M to pay $6B to settle hearing

Manufacturing giant 3M will pay $6 billion to settle hundreds of thousands of claims brought by military veterans and service members who said its earplugs caused hearing loss during their service.

The deal announced Tuesday resolves one of the largest mass torts in U.S. history. More than 300,000 claims were submitted on behalf of plaintiffs who alleged the earplugs could loosen in the ear, reducing their effectiveness and leaving the user vulnerable to hearing loss or tinnitus, which is a continuous ringing or buzzing sound in the ears.

“This historic agreement represents a tremendous victory for the thousands of men and women who bravely served our country and returned home with life-altering hearing injuries,” attorneys for the plaintiffs said in a joint statement.

The settlement was made without an admission of liability, the company said in its Tuesday announcement. 3M contends its earplugs “are safe and effective when used properly.”

The case emerged from a 2016 whistleblower lawsuit filed by Moldex-Metric, a rival earplug maker, on behalf of the U.S. government. It alleged that earplugs, called the CAEv2, had a known defect that made them unsafe.

The earplugs were originally manufactured by Aearo Technologies, which 3M acquired in 2008. The U.S. military purchased the earplugs from 2003 to 2015, according to court filings.

In 2018, 3M agreed to pay $9.1 million to the U.S. government to resolve allegations by Moldex-Metric that the earplugs were defective, but it did not admit liability.

Tuesday’s agreement resolves another major legal case for 3M, a sprawling conglomerate that makes hundreds of products spanning dozens of industries. It is known for common household items such as Scotch tape and Ace bandages, as well as industrial components such as coatings and sealants. Its medical and orthodontic divisions make devices such as stethoscopes, as well as the preformed crowns that dentists use in root canals. Its N95 and KN95 masks became ubiquitous during the coronavirus pandemic.

In June, 3M agreed to pay $10.4 billion over 13 years to fund public water suppliers that have detected perfluoroalkyl and polyfluoroalkyl substances, known as PFAS and called forever chemicals because they don’t break down in the environment. Plaintiffs numbering in the thousands alleged that chemicals in the company’s consumer products could cause cancer, lower fertility, birth defects and other health problems. The company did not admit liability in that settlement.

3M stock has risen more than 6 percent since news of a potential settlement surfaced Monday in the Wall Street Journal and Bloomberg News. Some analysts had expected the litigation to cost the company between $10 billion and $15 billion, according to the Journal.

“The market prices in a variety of scenarios, and it seems like the market was pricing in that it could have been a bigger fine or there could have been more lawsuits,” said Brian Jacobson, chief economist at Annex Wealth Management.

Carl Tobias, a University of Richmond law professor who has been following the case, says the award is smaller than expected. The typical plaintiff would get $25,000 unless they can prove they suffered serious injuries, Tobias said, compared to some individual verdicts in the case that have already reached millions of dollars.

Tobias said the settlement requires the endorsement of 98 percent of claimants, or it could fall apart.

“As a number of veterans look at those bellwethers where the awards are as high as $200 million, they may look at the [$25,000] figure and decide it’s too low,” Tobias said.

In its news release, 3M said it is prepared to continue to defend itself through litigation “if certain terms of the settlement agreement are not fulfilled.”

The settlement is to be paid out over six years. It includes $5 billion in cash and $1 billion in stock, which is to be paid to plaintiffs based on a 10-day moving average price at the time it is issued, at which time it can be sold immediately, according to people close to the settlement discussions.

An earlier version of this article gave an incorrect estimate of the amount a typical plaintiff would receive in the 3M earplug settlement. The estimate is $25,000, not $12,500. The article has been corrected.