An international conglomerate is filing a division for bankruptcy to avoid payment for suits filed by hundreds of thousands of veterans, lawyers for Ontario firm McCune Wright Arevalo said Aug. 1.
Aearo Technologies supplied earplugs to the military from 2003 to 2015, and was bought by 3M in 2008.
3M announced Aearo’s bankruptcy last week, after 230,000 veterans have filed cases against the company, alleging deceit and defects resulting in tinnitus and hearing loss.
“A company that has $47 billion in assets, that has net income of over $15 billion in the last three years, that has sent $13 billion back to shareholders and can pay its CEO $15 billion in the last three years is not a bankrupt company.”
Richard McCune, McCune, Wright, Arevalo, LLP
3M claimed it’s seeking to establish a trust to resolve all legal claims.
“3M and Aearo Technologies believe the Combat Arms Earplugs were effective and safe when used properly, but nevertheless face increasing litigation, including approximately 115,000 filed claims and an additional 120,000 claims on an administrative docket as of June 30, 2022. The well established Chapter 11 process is intended to achieve an efficient and equitable resolution, reduce uncertainty, and increase clarity for all stakeholders, while reducing the cost and time that could otherwise be required to litigate thousands of cases,” 3M said in a press release.
If Aearo’s bankruptcy proceeds, the company could be held responsible to pay out only $1 billion, which would be $4,000 per affected service member, said MWA partner Richard McCune at a press conference.
MWA will challenge the bankruptcy in court, with the help of other attorneys also involved in the national litigation, McCune said.
McCune said the company has been profitable in recent years, and is abusing bankruptcy law to get out of impending lawsuits.
“This is true malice at its finest, and this is big business trying to find the easiest way out, instead of holding themselves accountable and taking care of the responsibility they have,” said plaintiff and veteran James Ingles.
Government case
In 2016, Culver City family-owned earplug-and-safety company Moldex-Metric brought a case against 3M, claiming the company knowingly sold defective earplugs to the military, and did not inform the military of the defects.
Moldex brought the case on behalf of the government. The Department of Justice picked up the case, and settled with 3M in 2018.
3M paid $9.1 million to resolve that case.
230,000 more lawsuits against 3M
Since then, 230,000 veterans filed individual cases against 3M, all handled in Florida court. Thirteen of 16 juries in bellwether cases found that 3M was at fault, wrote MWA partner Michele Vercoski.
The average verdict for those cases brings in $10 million, wrote Vercoski.
The last verdict, May 20, found 3M guilty of design defect, failure to warn, fraudulent misrepresentation, fraudulent concealment and negligent misrepresentation. That jury awarded the plaintiff $5 million in damages, and $72.5 million in punitive damages.
3M is filing Aearo for bankruptcy to avoid its legal responsibility, said McCune.
3M’s 2021 annual report shows 3M had $47 billion in total assets and $15 billion in net income, McCune showed. 3M returned $14 billion to shareholders between 2018 and 2021, and 3M chairman Michael Roman received $63 million in compensation in the same time period, McCune showed.
“A company that has $47 billion in assets, that has net income of over $15 billion in the last three years, that has sent $13 billion back to shareholders and can pay its CEO $15 billion in the last three years is not a bankrupt company,” McCune said.
MWA represents 143 veterans in litigation against 3M.
Negligence suit
Ingles, a Columbus, Ohio, police officer, joined the military in 1996. He was deployed to Kosovo in 1996, Iraq in 2009 and Afghanistan in 2011. He began to consistently get ringing in his left ear.
Ingles’ tinnitus endangered him as a police officer, and interfered with his family life, he said.
He received a hearing aid, and learned to read lips.
Ingles reached out to MWA after hearing about the DOJ settlement, and has been working hard to document his case in the last three years, he said.
“I’m not surprised one bit that a large organization like this would find a way to use the law, bankruptcy laws, to weasel their way out of this. My personal opinion, being a veteran, is that even if I walk away from this for nothing, but I saw other veterans that have benefited from this (lawsuit) it would be very rewarding,” Ingles said.
Ingles brings counts of negligence, breach of warranty, fraudulent concealment, fraud and deceit, and unjust enrichment, among others.
3M moved for summary judgment against Ingles’ case July 21, claiming it is barred by the government contract defense. They also claim his case is barred by Ohio’s two-year product statute of limitations. The judge has not yet ruled on the motion.
