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Thursday, June 20, 2024

3M to Pay $6B for Faulty Earplugs, Hearing Loss Allegations

3M has reached a $6 billion settlement to address around 300,000 lawsuits claiming that the company provided faulty combat earplugs to the military, resulting in significant injuries like hearing loss. In their statement, 3M clarified that this settlement is not an admission of liability and will be paid out over several years, consisting of $5 billion in cash and $1 billion in stock.

3M defended the safety and effectiveness of the earplugs when used correctly, expressing readiness to continue defending itself if specific settlement terms are not met. These earplugs were utilized by the US military in training and combat between 2003 and 2015. Veterans alleged that 3M sold defective earplugs for hearing issues and tinnitus.

The earplugs in question were initially produced by Aearo Technologies, a company acquired by 3M in 2008. Aearo attempted to file for bankruptcy to manage its liabilities and limit exposure, but this was rejected by a judge who deemed it inappropriate for a financially sound debtor with no imminent solvency issues to seek bankruptcy protection.

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3M expects a pre-tax charge of approximately $4.2 billion for the third quarter of 2023 due to this settlement. Interestingly, the company’s stock price rose by 5% on the news, possibly because investors had anticipated a more significant settlement amount.

This is the second significant lawsuit settlement for 3M during the summer, following their announcement in June that they would allocate up to $10.3 billion over 13 years to support public water suppliers in the United States dealing with the detection of toxic “forever chemicals” called polyfluoroalkyl and perfluoroalkyl substances (PFAS) in their water sources.

PFAS, often called “forever chemicals,” have been found in numerous household items and are used in coatings that resist water, grease, and oil. 3M faced thousands of lawsuits asserting that they were aware of PFAS-related health risks, including cancer and developmental defects, and that these chemicals contaminated US drinking water systems. As a response, 3M pledged to cease production of these controversial chemicals by the end of 2025.

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