Earplug judge can't stop 3M's bankruptcy plan, company says

The logo of 3M is seen at the 3M Tilloy plant in Tilloy-Lez-Cambrai, France, August 18, 2019. REUTERS/Pascal Rossignol
  • 3M defends legality of plan to resolve earplug liability in subsidiary's bankruptcy
  • District judge to hold hearing Thursday

(Reuters) - 3M Co has urged a federal judge not to interfere with its plan to move claims that its military-issue earplugs caused hearing damage into bankruptcy court, where the company believes it can resolve them more favorably than in federal mass tort litigation in Florida.

The filings in Pensacola federal court on Wednesday came in response to motions filed by veterans last week seeking to block 3M from avoiding lawsuits by putting its Aearo Technologies subsidiary — the original maker of the earplugs, which it bought in 2008 — into bankruptcy.

A spokesman for the plaintiffs' attorneys had no immediate comment.

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U.S. District Judge M. Casey Rodgers, who has presided since 2019 over consolidated multidistrict litigation that has grown to nearly 300,000 claims, has scheduled a hearing on the issue for Thursday.

Plaintiffs have said they suffered injuries including tinnitus and hearing loss after using Aearo's CAEv2 earplugs in combat or training because they did not form an adequate seal.

Out of the 16 trials in the multidistrict litigation to date involving 19 service members, plaintiffs have won 10, with about $265 million in combined awards to 13 plaintiffs.

Aearo filed for bankruptcy on July 26 and said it had committed $1 billion to resolve the earplug litigation.

In a motion filed last Thursday, veteran Guy Cupit argued that 3M, which has not declared bankruptcy itself, cannot now argue that it is not liable for its subsidiary's products because it failed to raise that defense over three years of litigation.

In its response to Cupit, 3M argued that it was not required to raise that defense in any individual case, because it had preserved its right to raise any defenses in its answer to the so-called master complaint used throughout the multidistrict litigation.

Another veteran, Richard Valle, last Wednesday asked Rodgers to issue an injunction barring 3M from taking any legal action to stop any plaintiffs from pursuing earplug claims against it in district court. He said she had the authority to do so under the All Writs Act, an 18th century federal law that gives federal courts the power to issue any orders "necessary or appropriate in aid of their respective jurisdictions."

3M countered that the All Writs Act did not allow Rodgers to overcome the clear legal authority of the bankruptcy court.

The MDL is In re 3M Combat Arms Earplug Products Liability Litigation, U.S. District Court, Northern District of Florida, No. 19-md-2885.

For the plaintiffs: Adam Wolfson of Quinn Emanuel Urquhart & Sullivan; Ashley Keller of Keller Postman; Bryan Aylstock, Daniel Thornburgh and Jennifer Hoekstra of Aylstock, Witkin, Kreis & Overholtz; Shelley Hutson of Clark, Love & Hutson; Chris Seeger of Seeger Weiss; and Joseph Messa of Messa & Associates

For 3M: Kimberly Branscome of Dechert; and Jessica Lauria of White & Case

Read more:

Veterans seek to block 3M's bankruptcy gambit

3M to spin off healthcare business, earplugs unit seeks bankruptcy protection

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.