(Bloomberg) -- 3M Co. lost its fight to block jury trials in more than 230,000 lawsuits accusing it of harming US soldiers.
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US Bankruptcy Judge Jeffrey J. Graham refused to temporarily halt the lawsuits accusing 3M and its bankrupt subsidiary, Aearo Technologies, of selling faulty combat earplugs that damaged the hearing of veterans who used them.
Graham’s decision upends 3M’s decision to resolve the lawsuits by putting Aearo in bankruptcy, where controversial rules sometimes allow parent companies to benefit from a litigation stay.
3M is employing 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.
Lawyers for the soldiers have demanded the right to continue taking their cases to trial. The ruling means 3M now faces the prospect of jury verdicts from around the country, with one expert hired by the soldiers’ law firms estimating the company could face more than $100 billion in damages from the claims.
On July 26, the company put Aearo into bankruptcy in Indianapolis. Under Chapter 11 rules, Aearo is automatically entitled to freeze the lawsuits it faces, but because 3M itself didn’t file bankruptcy a judge had to agree to give the industrial conglomerate the same protection.
Advocates for the soldiers suing 3M argue that Chapter 11 bankruptcy rules were never designed for profitable corporations.
Until last month, 3M was fighting the claims in federal court in Pensacola, Florida, where a judge was overseeing the initial, procedural steps needed to prepare the lawsuits for separate jury trials that would take place in other courts. The judge overseeing that process, which is known as multi-district litigation, or MDL, has questioned 3M’s decision to use bankruptcy instead.
The bankruptcy is Aearo Technologies LLC, 22-02890, United States Bankruptcy Court for the Southern District of Indiana (Indianapolis).
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