3M Spends More Than $450 Million in Legal Costs on Earplug Cases

3M Co. has racked up more than $450 million in defense costs as it struggles to fend off allegations defective earplugs it sold to the US military harmed soldiers’ hearing, court filings show.

The company — which has lost a slew of test trials over the earplugs — put a unit into Chapter 11 in July in hopes of corralling the estimated $7 billion litigation over the product. A bankruptcy court filing last month detailed how 3M’s lawyers are seeking more than $19 million in fees and costs for work on the case just between July and October, bringing the running total to $366 million.

The company also projected in July it would spend another $100 million on lawyers and legal costs defending the earplug cases over the rest of 2022, bringing its potential total bill to about $466 million, according to court filings.

“They really need to come up with a reasonable settlement plan for these cases to stop the bleeding,” said Carl Tobias, a University of Richmond law professor who teaches about mass-tort cases. “$466 million is lot of money to spend on lawyers and defense costs, not to mention the reputation harm they’re doing to themselves with all these trial losses.”

The fee tally is just the latest twist in the more than four-year litigation over 3M’s earplugs. More than a dozen juries concluded veterans’ hearing loss was tied to the defective products and ordered their maker to pay more than $300 million in damages. 3M also has won six defense verdicts in so-called test trials. A bankruptcy judge ruled the company couldn’t use its bankruptcy filing to stop the earplug trials. More than 200,000 veterans claim they were injured by the faulty earplugs.

Representatives of St. Paul, Minnesota-based 3M didn’t immediately return emails Friday seeking comment on the legal-fee tally in the earplug litigation.

3M put its Aearo subsidiary into Chapter 11 in Indianapolis in hopes of facilitating quicker and cheaper settlements of the earplug suits. Other companies facing mass-tort litigation — including Johnston & Johnson and Purdue Pharma LP — are relying on similar bankruptcy filings to deal with their litigation woes in that forum rather than through state- and federal-court trials and settlements.

But the judge overseeing a consolidation of the earplug cases in Florida last month ruled 3M can’t shift financial responsibility for the damage awards and other liabilities to its Aearo unit in bankruptcy. 3M has set up mediation efforts in both the Florida case and the Indiana bankruptcy action in hopes of coming up with out-of-court settlements.

The company’s attorneys noted in the bankruptcy filings that 3M spent about $47.77 million on attorneys’ fees and legal costs in the first quarter of last year and about $74.5 million in the second quarter. It worked out to about “$4.7 million spent per week,” the lawyers said in the filing. 3M also expected to pay about $3.8 million a week on legal fees for the rest of 2022, according to the filing.

The bankruptcy case is Aearo Technologies LLC, 22-02890, US Bankruptcy Court for the Southern District of Indiana (Indianapolis).

To contact the reporter on this story:
Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editors responsible for this story:
Katia Porzecanski at kporzecansk1@bloomberg.net

Dawn McCarty, Michael B. Marois

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