3M reaches $6B settlement over claims that defective military earplugs led to hearing damage

After spending the better part of the last decade defending itself from claims that it knowingly sold defective earplugs to the U.S. military, resulting in thousands of reports of hearing loss among service members, 3M has reached a settlement in a far-reaching class-action lawsuit over the matter.

The manufacturing giant announced the settlement on Tuesday. Under the terms of the agreement, per a filing (PDF) with the U.S. Securities and Exchange Commission, 3M will pay out a total of $6.01 billion between this year and 2029, split between $5.01 billion in cash and $1 billion in shares of its common stock.

According to terms laid out in the filing, 3M will only have to complete the payouts if certain conditions are met, “including that at least 98% of individuals with actual or potential litigation claims” enroll in the settlement and fully release all claims against the company; otherwise, 3M can choose to terminate the agreement.

To gear up for the payouts, 3M said it will record a $4.2 billion pre-tax charge on its third-quarter earnings sheet; it has already accrued another $1.1 billion in preparation for the settlement. Meanwhile, in an attempt to offset a portion of the payments, 3M and subsidiary Aearo Technologies—the maker of the earplugs, which 3M acquired in 2008—are “actively engaged in insurance recovery activities.”

The duo had previously tried to shield themselves from a large settlement by having Aearo file for bankruptcy in Indiana; the filing was dismissed in June of this year when the court concluded that the company, backed by 3M, wasn’t financially strapped enough to justify bankruptcy protections.

The settlement is meant to resolve all claims associated with the military-grade earplugs, according to 3M, including the Florida-based class-action suit and a simultaneous action in Minnesota state court, plus any “potential future claims.”

Despite agreeing to settle the case, 3M stopped short of admitting to any liability.

“The products at issue in this litigation are safe and effective when used properly,” it wrote in the SEC filing, adding, “3M is prepared to continue to defend itself in the litigation if certain agreed terms of the settlement agreement are not fulfilled.”

The litigation dates back to 2016, when hearing and respiratory protection devicemaker Moldex-Metric filed a whistleblower complaint alleging that 3M and Aearo had sold “dangerously defective” dual-ended Combat Arms earplugs to the U.S. Department of Defense between 2003 and 2015. The earplugs were said to be at risk of loosening during wear, leading to hearing loss and tinnitus among “thousands” of soldiers who’d worn them to protect their ears from loud noises during training and active combat operations.

Though 3M ultimately settled that case for $9.1 million in 2018—again, without admitting any guilt—it opened the floodgates for thousands of individual plaintiffs to sue the company for the hearing issues that they claimed were caused by ineffective earplugs.

Those lawsuits, which were eventually consolidated into a multi-district litigation in Florida, numbered more than 250,000, making it the largest mass tort action in U.S. history. Sixteen individual suits have already gone to court separately, and 3M has lost 10, resulting in about $265 million in total damage awards, Reuters reports.

The U.S. Department of Veterans Affairs lists hearing loss—and specifically ear-ringing tinnitus—as the most common service-related disabilities among U.S. veterans, citing data from a 2019 study showing that tinnitus rates of active-duty service members have significantly increased since 2001.

3M has deflected responsibility for that rise: In a March press release, it pointed to Department of Defense data spanning more than 175,000 plaintiffs in the case showing that more than 85% met healthy hearing standards set by the American Medical Association, World Health Organization and National Institutes of Health.

Of those plaintiffs who did have hearing loss under the medical standards, about a quarter had the condition recorded “before they ever used the Combat Arms earplugs,” per 3M. As for those who developed the condition after using the earplugs, the company suggested that it could’ve been tied to a variety of causes, “including medical conditions unrelated to noise exposure, non-military noise exposure, hearing loss that predates a service member’s use of Combat Arms earplugs, and injuries suffered while not wearing Combat Arms earplugs.”