aearo technologies

3M Unit Bankruptcy Toss Is Second Blow to Mass Tort Defense Play

The termination of 3M Co. unit Aearo Technologies LLC’s bankruptcy casts fresh doubt on the tactic of using Chapter 11 bankruptcy as a legal strategy in mass tort litigation, likely emboldening plaintiffs.

The June 9 decision from Judge Jeffrey J. Graham of the US Bankruptcy Court for the Southern District of Indiana hewed closely to the US Court of Appeals for the Third Circuit’s analysis earlier this year in its dismissal of a Johnson & Johnson subsidiary’s bankruptcy on similar grounds.

The two rulings are a pair of major setbacks for solvent companies eyeing bankruptcy to handle mass tort liabilities—a practice that has seen substantial growth in recent years.

Graham’s decision, along with the Third Circuit’s ruling on J&J unit LTL Management LLC, creates “hurdles that may be absent from the bankruptcy code,” said attorney Douglas Mintz of Schulte Roth & Zabel LLP.

“I think the biggest application here is it will empower plaintiffs to push more aggressively outside of bankruptcy and leave tort defendants with fewer tools in their toolbox or less certainty that one of the tools will work,” Mintz said.

Graham held that Aearo’s attempt to use bankruptcy to settle approximately 230,000 lawsuits over allegedly defective military

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June 15, 2023 by ATTORNEY

3M awaits bankruptcy ruling that could sink litigation tactic

3M’s attempt to block jury trials of more than 230,000 lawsuits accusing it of harming U.S. soldiers faces a key test this week in front of a federal judge in Indianapolis.

U.S. Bankruptcy Judge Jeffrey Graham is set to consider a temporary halt to the lawsuits so that 3M and its bankrupt subsidiary, Aearo Technologies, can try to settle the claims, most of which have been filed by veterans who say the combat arms earplugs left them with hearing damage.

Graham’s decision will echo across the offices of other firms facing massive numbers of product liability lawsuits, Harvard Law School professor Jared Ellias said in an interview.

“To the extent 3M suffers a setback here it’s likely to set off alarm bells in other corporate boardrooms of companies that want to take advantage of the bankruptcy system,” Ellias said.

The Aearo case uses an increasingly popular strategy in which profitable companies use insolvency proceedings to force settlement talks with victims of allegedly harmful products.

Johnson & Johnson and lumber giant Georgia-Pacific have also put units into bankruptcy with the same goal of ending their litigation woes in one place instead of fighting thousands of trials around the country.

Fighting each

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August 26, 2022 by ATTORNEY

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

The 3M logo is seen at its global headquarters in Maplewood, Minnesota. REUTERS/Nicholas Pfosi

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(Reuters) – A 3M Co subsidiary on Wednesday criticized the way federal courts have handled 290,000 consolidated lawsuits over allegedly defective earplugs it made for the U.S. military, saying that the “broken” legal system allowed claims to balloon and threatened the company’s ability to settle them.

3M subsidiary Aearo Technologies LLC pressed for, but did not get, a court order that would protect its parent company from the lawsuits at its first hearing in U.S. bankruptcy court in Indianapolis. Instead, it reached a more limited agreement with plaintiffs to pause work for three weeks, interrupting witness depositions and expert reports scheduled in the lawsuits, which have been consolidated in the largest-ever multidistrict litigation (MDL) in U.S. court.

Plaintiffs sued Aearo and 3M over the company’s Combat Arms Earplugs version 2 (CAEv2), claiming they are defective and damaged their hearing. The cases ballooned to a peak of more than 290,000 last year and now account for nearly one-third of all cases pending in all federal courts, according to a court filing.

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August 12, 2022 by ATTORNEY
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