On July 26, 3M subsidiary Aearo Technologies filed for Chapter 11 bankruptcy in Indiana in an attempt to handle the hundreds of thousands of claims of hearing loss from defective earplugs. The company also announced its intentions to create a $1 billion trust to pay for the defective earplug claims.
Why did Aearo Technologies file bankruptcy?
There are three main reasons that 3M’s subsidiary, Aearo Technologies, filed for Chapter 11 bankruptcy. First, the company must handle approximately 230,000 claims of hearing damage from earplugs that were defective. Second, the company has other product liability claims to address. Though fewer in number, claims regarding defective masks and respirators are piling on top of the numerous defective earplug claims. Third, 3M plans to create a $1 billion trust to pay for litigation claims.
3M CEO Mike Roman said that the company “determined that taking this decisive action now will allow 3M and Aearo Technologies to address these claims in a way that is more efficient and equitable than the current litigation.”
Aearo also stated that settling the earplug claims would be more fair to the company and the claimants, claiming the MDL had become a “litigation vortex” with “outsized” verdicts and a “flawed” bellwether trial process.
Why 3M’s $1 billion trust is an insult to veterans
While the idea of a $1 billion trust may initially sound like a good thing, the lead counsel for the plaintiffs in the MDL say that the trust is “woefully underfunded.” If the claims were paid out according to that $1 billion trust, each veteran would receive a mere $5,000, a tiny fraction of the verdicts in the bellwether trials, which often awarded plaintiffs millions of dollars. 3M claims to have great respect for servicemembers, but the proposed trust shows that the company cares more about its pocketbook than the lives of the men and women who served our country.
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