3M earplug bankruptcy creates ‘corrosive’ tension with other courts, lawyer says

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

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

3M subsidiary Aearo Technologies LLC sought, but did not obtain, a court order that would shield its parent company from lawsuits in its first hearing in US bankruptcy court in Indianapolis. Instead, he reached a more limited agreement with plaintiffs to suspend work for three weeks, halting scheduled witness depositions and expert reports in the trials, which have been consolidated in the largest multidistrict litigation. (MDL) in a US court.

Plaintiffs sued Aearo and 3M over the company’s Combat Arms version 2 (CAEv2) earplugs, claiming they were defective and damaged their hearing. According to a filing in court.

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Aearo filed for Chapter 11 protection on Tuesday to resolve the lawsuits and committed $1 billion to fund a trust to fund the settlement.

The filing sparked a battle in multiple courts over the impact of the bankruptcy on the ongoing litigation against 3M. Aearo’s attorney, David Bernick, said during Wednesday’s bankruptcy court hearing that 3M and Aearo need a broader pause in the MDL litigation to pursue a bankruptcy restructuring. Bernick said the judge overseeing the MDL had previously questioned whether the bankruptcy was filed in good faith, which could impede progress in bankruptcy court.

“We have a tension that has developed between this procedure and the MDL, and it’s very corrosive,” Bernick said.

U.S. bankruptcy judge Jeffrey Graham said he did not have enough evidence on Aearo’s first day in court to block further lawsuits against 3M, which is not bankrupt but said he would consider the matter at a hearing on August 15.

U.S. District Judge Casey Rodgers in Pensacola, Florida, said in a hearing Wednesday morning that she did not believe Aearo’s bankruptcy filing automatically protected parent 3M, and she blasted the company for having canceled depositions scheduled for Tuesday with “not so much as a phone call” to her.

Separately, a group of plaintiffs filed a notice with the Multidistrict Litigation Judicial Panel, asking that the bankruptcy case be moved to Florida and overseen by Rodgers. The lawyer who made the request, Ashley Keller, said he would not withdraw it as part of the three-week court recess.

Of the MDL’s 16 landmark lawsuits to date involving 19 service members, plaintiffs have won in 10, with approximately $265 million in combined awards for 13 plaintiffs.

The case is Aearo Technologies LLC, US Bankruptcy Court for the Southern District of Indiana, No. 22-10493.

For Aearo Technologies: Chad Husnick and David Bernick of Kirkland & Ellis

For the MDL Plaintiffs Committee: Rob Pfister and Sasha Gurvitz of KTBS Law

Read more:

Is the 3M earplug bankruptcy the beginning of the end for mass tort MDLs?

3M spins off healthcare business, earplugs unit files for bankruptcy

3M Tries to Reduce Massive Earplug Disputes with Filing Fees

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Reporting by Dietrich Knauth

Our standards: The Thomson Reuters Trust Principles.

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