Veterans seek to block 3M's bankruptcy gambit

3 minute read

The logo of 3M is seen at the 3M Tilloy plant in Tilloy-Lez-Cambrai, France, August 18, 2019. REUTERS/Pascal Rossignol

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(Reuters) - Veterans who claim that 3M Co's military-issue earplugs caused hearing damage are asking the judge overseeing their record-shattering mass tort litigation to block the company from offloading its liability onto a bankrupt subsidiary.

Two motions filed this week in Pensacola, Florida, federal court by plaintiffs in the multidistrict litigation made separate arguments over why the company could not escape the nearly 300,000 lawsuits by putting its Aearo Technologies subsidiary - the original maker of the earplugs, which 3M bought in 2008 - into bankruptcy.

3M has said it believes bankruptcy law allows for this strategy and has argued that the Indianapolis bankruptcy court can resolve the earplug claims more fairly than the MDL.

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"We are prepared to move forward and believe the applicable law supports our position," 3M said in a statement.

Aearo filed for bankruptcy on July 26 and said it had committed $1 billion to resolve the earplug litigation. Out of the 16 trials in that litigation to date involving 19 service members, plaintiffs have won 10, with about $265 million in combined awards to 13 plaintiffs.

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.

In a motion filed 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. He asked U.S. District Judge M. Casey Rodgers, who has presided over the litigation since 2019 to enter an order blocking 3M "from arguing it bears anything but full liability" for injuries.

Cupit's motion came a day after another veteran, Richard Valle, asked the judge to issue an injunction barring 3M from taking any legal action to stop any plaintiffs from pursuing earplug claims against it in district court.

Valle argued that Rodgers had the authority to issue such an injunction 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."

Valle said such an order was necessary to prevent 3M from unfairly seeking a "second bite at the apple" in bankruptcy court simply because it does not like the results it has obtained in the district court.

Rodgers has given 3M until Tuesday to respond to the motions and has scheduled a hearing on them for Thursday.

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 and Caleb Seeley of Seeger Weiss; and Joseph Messa of Messa & Associates

For 3M: Kimberly Branscome of Dechert

Read more:

3M earplug bankruptcy creates "corrosive" tension with other courts, attorney says

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.