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Judge rules 3M can’t duck Earplug Lawsuits with Bankruptcy Claim

The 3M company lost its bid to block jury trials in earplug lawsuits filed by more than 230,000 U.S. soldiers in the last couple of years. U.S. Bankruptcy Judge Jeffrey J. Graham refused to temporarily pause these suits brought by former or active members of the military. All of them allege that 3M, along with its bankrupt (declared) subsidiary, Aearo Technologies, sold defective combat earplugs that caused veterans to lose their hearing and/or suffer from tinnitus.

Plaintiffs’ lawyers are preparing the soldiers’ claims for jury trials in the federal multi-district litigation court (MDL) set up in Indiana for that purpose.

3M Responds
A 3M spokesman said of last week’s ruling: “We are disappointed in the court’s ruling today and will be filing an appeal. Further litigation in the MDL court benefits no one.”

Judge Graham’s decision turns back 3M’s move to resolve the suits by declaring Aearo is in bankruptcy. In the past, debatable rulings have sometimes let parent companies off the liability hook – or let them off easier than they would have been without their bankruptcy declaration – by stopping jury trials and settling the lawsuits for much less compensation than plaintiffs believe their cases were worth.

A temporary stoppage here could help 3M bring soldiers to the settlement table, said the judge in his ruling. But he also ruled that Indiana’s federal bankruptcy law does not allow him to grant 3M’s request for an injunction.

Judge Graham wrote: “Admittedly, it is tempting to be swayed by the sheer size of the MDL at issue in this case, but that alone provides insufficient reason for the court to conclude that an injunction is necessary.”

The 3M company appears to be following in the recent footsteps of other large companies that have used insolvency proceedings to trigger settlement talks with plaintiffs allegedly injured by their products. Johnson & Johnson and Georgia-Pacific recently put units of their own into bankruptcy with the same goal of ending litigation against them in one venue, rather than slugging it out in thousands of individual trials across the U.S.

Soldiers’ Lawyers Respond
On the other side, the soldiers’ lawyers have demanded the right to keep trying their cases in courts of law. This ruling means 3M will face the prospect of trying cases to verdict across the country. That could potentially spell huge losses for 3M. One plaintiffs’ expert has estimated the company could face more than $100 billion in damages in the earplug claims, but other lawyers say that putting any potential dollar amounts on any of these cases at this point is irresponsible speculation.

Veterans’ advocates said this ruling affirms their argument that profitable companies should not be able to weaponize a bankruptcy court in order to skirt lawsuits.

“This is a great victory for the 230,000 US service members harmed by 3M’s highly-questionable practices in these earplug cases,” said Houston attorney Marla Briscoe. “Our lawyers look forward to prosecuting these claims for our clients.”

On July 26, 2022, 3M declared Aearo bankrupt in Indianapolis. Chapter 11 rules then allow Aearo to automatically freeze the lawsuits it faces. However, because 3M itself did not file bankruptcy, a judge had to assent to giving 3M the same bankruptcy protection.

A Federal Judiciary Conflict Awaits

Judge Graham’s ruling tees up a conflict between two separate branches of federal judiciary courts, because another court district judge recently came to the exact opposite conclusion, this one in a Johnson & Johnson unit bankruptcy. In Trenton, New Jersey, US Bankruptcy Judge Michael Kaplan ruled that stopping about 40,000 lawsuits against J&J was necessary to resolve the claims.

However, lawyers suing Johnson & Johnson on behalf of women who claim J&J’s baby powder gave them ovarian cancer are appealing Judge Kaplan’s ruling.

Prior to July 2022, 3M was fighting the claims in Pensacola, Florida in a federal court. A judge there was overseeing the first procedural steps required to prepare the suits for separate jury trials scheduled in other court venues. The judge overseeing that MDL has questioned 3M’s declaration of bankruptcy for its subsidiary.

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

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