3M Sending Payments for Faulty Combat Earplugs

Santa Clara, CAAs part of its $6 billion faulty combat earplug settlement, 3M began sending payments last month to military veterans who suffered hearing loss and other significant injuries. The payments will resolve about 300,000 lawsuits claiming the manufacturing company knowingly sold defective earplugs that caused hearing loss and tinnitus. Those affected are mainly US military who were in training and combat from 2003 to 2015.

In August 2023, 3M and Plaintiffs’ Leadership Counsel for the MDL and Minnesota coordinated proceeding agreed to a Master Settlement Agreement to resolve claims against 3M’s Combat Arms Version 2 earplugs manufactured from 1999 to 2015. (A website has been set up for claimants for more information.) And the Star Tribune reported that more of the 276,000 claimants who are part of the 3M lawsuit may soon opt into the settlement instead of going to trial. Specifically, the last MDL count is 276,568 cases.

Settlement Details

CNN announced last month that 3M has begun sending out approximately $250 million in payments to service members and veterans, with payouts being completed by the end of January. It is unclear, however, exactly how much money each individual claimant will receive. What is clear is that this first round of payments is expected to reach over 30,000 past and present military service members. And these payments are part of a multibillion settlement regarding the defective safety equipment. Still, the $6 billion settlement amount is significantly less than the $10 billion to $15 billion that some analysts predicted the case would cost the company, reports Fox News. 3M stated that it will record a $4.2 million pre-tax charge in the third quarter, which "represents the $5.3 billion pre-tax present value of contributions under the agreement net of 3M's existing accrual of approximately $1.1 billion related to this matter.”

Under the settlement, 3M was going to shell out $5 billion in cash and $1 billion in 3M common stock to claimants between 2023 and 2029. Judge Rodgers approved this plan based on the valuation methodology and other considerations supporting the fairness of using unregistered stock for payment.

But on January 30, 2024, 3M decided to pay $1 billion in cash, instead of using stock. One law firm explained that this amendment to the settlement was made a month after they received court permission to issue unregistered stock. The change is finalized and outlined in a court order specifying a schedule for six payments, according to  Miller & Zois. These payments will start after it’s confirmed that at least 98% of claimants have agreed to participate in the settlement, a threshold 3M expects to exceed by March 25, 2024. As to why 3M is choosing cash payments over stock, attorneys said, “No idea. My guess is that it was a huge administrative hassle.” 

Veterans

Either way, no doubt many veterans are relieved. At least one veteran, who will join the settlement, was apprehensive that 3M might file for bankruptcy, which could affect the settlement that involves transferring $1 billion in stock. Another veteran is incarcerated in a Mississippi prison from an armed robbery conviction – he was the driver of the getaway vehicle. A law firm filed a motion to extend his registration deadline, the reason being slow mail at the prison but it is unclear why the attorneys waited until the last minute. (For MSA, the first part of the agreement, the initial registration date is now January 25, 2024, and the final date is March 25, 2024. For MSA III, another part of the agreement, the initial date is December 20, 2023, and the final date is February 20, 2024.) 

Either way, one plaintiffs’ attorney said "We are pleased with 3M's decision to move up this payment and appreciate its commitment to the resolution of these claims".