The company retained Wachtell, Lipton, Rosen & Katz to advise it on a tax-free spin-off of its $45 billion health care business by the end of 2023, 3M announced Tuesday. The company will keep a roughly 20% stake in the medical supplies company that it will sell off over time, 3M said in a statement.
White & Case is advising 3M on a bankruptcy proceeding it has initiated for Aearo Technologies LLC, an Indianapolis-based company bought by 3M in 2008 that allegedly made faulty combat earplugs.
Kirkland & Ellis is advising Aearo in its Chapter 11 proceedings in Indiana. Kirkland has had a role on nearly 5% of cases involving 3M in US federal courts within the past five years, as well as almost 4% for Aearo, per Bloomberg Law data.
3M faces roughly $33 billion in liabilities stemming from court fights over Aearo’s earplugs and chemical compounds called per- and polyfluoroalkyl substances, or PFAS, Bloomberg reported in February.
The company’s bid to put Aearo into bankruptcy while steering clear of insolvency itself is a strategy that Johnson & Johnson and Purdue Pharma LP followed, according to Bloomberg. Both companies faced litigation over the liability shield they sought to raise in bankruptcy court.
Reich, a former Big Law partner and Justice Department official, previously served as the top US in-house lawyer for Deutsche Bank during a time when the German financial services giant was facing a variety of legal and regulatory challenges.
Reich works with 3M’s new chief legal affairs officer, Kevin Rhodes, who took over in February after the company’s longtime law department leader Ivan Fong decamped for the top legal job at medical device maker Medtronic PLC.
Ice Miller is serving as co-counsel to Aearo in its bankruptcy case, for which 3M has committed $240 million to help fund, in addition to another $1 billion earmarked for a trust to resolve the defective earplug litigation.
An Aearo Chapter 11 petition lists 20 plaintiffs’ law firms representing mass tort claimants, including lead counsel Seeger Weiss and Pensacola, Fla.-based Aylstock, Witkin, Kreis & Overholtz.
Both firms issued a joint statement Tuesday criticizing 3M’s move to put Aearo into bankruptcy and pledged to fight the petition.
“3M’s bankruptcy maneuver is further proof that they value their profits and stock price more than the well-being of veterans who fought and served our country,” the firms said. “Considering that juries have ruled in favor of 13 out of 19 service members whose cases went to trial and awarded nearly $300 million in damages, the trust to resolve earplug litigation claims is woefully underfunded and not the ‘efficient and equitable resolution’ that 3M is desperately pretending it is.”
The Aearo matter isn’t the only legal challenge that 3M has faced in recent months.
Earlier this year, 3M joined other defendants in a $215 million privacy settlement to end class action litigation related to the collection of personal identification data on drivers using two Southern California toll roads.
3M subsequently hired Sooji Seo, an attorney and former chief privacy officer at Dell Technologies Inc., to serve as its new privacy chief.
Seo and Reich both work with 3M’s new chief legal affairs officer, Kevin Rhodes, who took over in February after the company’s longtime law department leader Ivan Fong decamped for the top legal job at medical device maker Medtronic PLC.