3M Co. failed a bankruptcy court gambit to resolve almost 230,000 military earplug defect complaints and is now finding another road through mass tort litigation, one that includes a combination of trials, appeals, and settlements which would require the company to make difficult decisions, particularly about scheduling.
It is under pressure to address the massive backlog of veterans' hearing loss and tinnitus claims, yet it has appeals pending. More trials beyond the 16 already held might either assist or damage its settlement position. The stakes in the multidistrict action, as well as on appeal, could not be higher.
On Aug. 26, shares of the firm, which also sells Scotch-brand tape, Post-It notes, and NexCare bandages, plummeted 9% after a federal bankruptcy court refused to suspend the multidistrict earplug case. 3M attempted to reroute the claims through its company Aearo Technologies, which designed the Combat Arms version 2 earplugs.
Since then, 3M's stock has dropped more than 14%, closing at $110.50 a share on September 30, down from a 12-month high of $186.30 on November 12, 2021.
Analysts have struggled to put a price tag on 3M's possible earplug risk. In February, intelligence assessed that the stock's price relative to its industrial rivals reflected a $33 billion discount due to earplugs and a PFAS mass torts litigation in which it is also involved.
An analyst testifying for some of the veterans in the Aearo bankruptcy stated in August that 3M's earplug losses may be more than $100 billion, a number 3M rejected as faulty and unsubstantiated.
Whatever the figure, the potential liabilities are substantial, forcing the corporation to exploit whatever power it has in upcoming trials and unresolved appeals in order to find a way ahead.
