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Judge sanctions 3M for Bankruptcy Ploy in Earplug Litigation

3M Earplug Lawsuit Update – Dec. 2022

The judge in charge of 3M earplug lawsuits has ruled that 3M can’t avoid legal liability by claiming a related subsidiary is bankrupt. A Florida federal judge running the largest-ever multidistrict litigation ruled last week that the company can’t shift blame to a codefendant in the Combat Arms Earplugs litigation.

U.S. District Judge M. Casey Rodgers granted the plaintiffs’ motion for summary judgment on 3M’s “full and independent liability” for injuries stemming from the use of the CAEv2 earplugs. She also found that 3M’s attempts to hide behind bankruptcy and move liability to its subsidiary – Aearo Technologies LLC – warrants a sanction.

Hundreds of thousands of military veterans and service members began to bring earplug lawsuits in April 2019. The plaintiffs claim 3M and Aearo supplied the military with a defective product called CAEv2 earplugs. The company has countered that the U.S. military bears some responsibility for the design and delivery of the plugs.

The judge’s ruling noted the late hour at which 3M attempted to shift liability onto a subsidiary concern which claimed bankruptcy, inferring that the company only did so after losing several trials which placed liability firmly onto 3M’s shoulders.

According to the order, 3M successfully lobbied the Judicial Panel on Multidistrict Litigation (MDL) to centralize all the CAEv2 claims in an MDL in 2019. She said the company then vigorously litigated for the next 3½ years, which included discovery and motions for 374 “Wave 1” plaintiffs’ cases.

Judge: 3M waged Scorched Earth Battle

Judge Rodgers said: “Scorched earth battle was waged against every theory of liability alleged in this litigation, yet there was nary a whisper that Aearo, and not 3M, was the only proper target, or even a target at all.”

Plaintiffs have prevailed in most 3M Earplug Trials

More than a dozen bellwether trials have seen court rooms so far. Thirteen verdicts have come for plaintiffs, while the defendants have prevailed in six, according to the judge’s order. She said that after 3M lost most of those trials, it suddenly declared that the MDL was a “failure. The company then took issue with the court’s rulings in which the plaintiffs prevailed.

She further said 3M then devised a scheme to evade unfavorable legal rulings and verdicts in the MDL to avoid potential future liability by seeking Chapter 11 protection. According to the order, it was not willing to undergo reorganization and submit to the oversight of a bankruptcy court. Aearo, instead, filed for Chapter 11 and sought a stay of litigation to 3M.

According to the order, the companies then reached an agreement that said 3M would allocate all of its liability for the earplug claims to Aearo in exchange for 3M’s commitment to fund all of Aearo’s liabilities and costs in bankruptcy.

Largest MDL in Federal Judiciary History

Judge Rodgers said:

“Newly (and voluntarily) saddled with all liability for the largest MDL in the federal judiciary’s history, Aearo would be recast as the ‘real-party defendant’ when it comes to CAEv2 claims and the parties’ funding and indemnity agreement heralded as validly creating an identity of interest between the depletion of Aearo’s assets in bankruptcy and continued litigation against 3M in the MDL, which, in the companies’ telling, justified a stay or injunction of CAEv2 litigation against 3M.”

​​If successful, 3M would reap all the benefits of bankruptcy with none of the attendant burdens, she added, further noting that the bankruptcy court had rejected that strategy and did not extend the stay to 3M.

3M attempts to rewrite history
According to her order, she said that after that plan failed, “[3M] sought to rewrite the history of the CAEv2, its relationship with Aearo, and the litigation by asserting for the first time that it has neither independent nor successor liability for any alleged CAEv2-related injuries.”

As early as June 2019, when the plaintiffs asked 3M whether there would be a dispute as to whether 3M or Aearo had responsibility for the CAEv2-related liabilities, 3M’s associate general counsel said no argument would be raised on the issue, according to the order. It further states that 3M’s entire course of conduct going forward was consistent with that statement. The company did not mention in any of the bellwether trials that it had anything but exclusive liability for the alleged earplug injuries.

Judge Roberts said:

“The findings clearly demonstrate a deliberate and continuous course of conduct and statements … successfully orchestrated by 3M to establish itself as the party responsible for alleged CAEv2 claims. (3M’s) assertions were either knowingly false at the time or, instead, and much more likely the case, regrettable truths that became incompatible with their bankruptcy strategy.”

“Either way, 3M’s attempt to renege on those positions now, and its duplicitous motives and mode of doing so, are beyond the pale of acceptable litigation conduct and reflect a flagrant contempt for this court and the MDL process.”

3M Abuses

The judge said 3M’s “abuses” forced the plaintiffs to expend substantial time and resources responding to them. She said the appropriate sanction is to hold the company to its statements and conduct on the issue of successor liability.

3M claims good faith efforts

In a response to the judge’s ruling last week, 3M said it disagreed with the “incomplete and inaccurate depiction of our good faith efforts in this litigation.” The company said the ruling should be reviewed on appeal before the MDL moves forward.

The case is In re: 3M Combat Arms Earplug Products Liability Litigation, case number 3:19-md-02885, in the U.S. District Court for the Northern District of Florida.

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