3M fights a growing legal battle over combat-grade earplugs

Former US Army Infantry Officer Nathan Frey says he underwent some of the most intense training the US Army had to offer from 2011 to 2015. With it came loud noises—everything from guns to helicopters and explosions.

To protect his hearing, Frey wore standard earplugs manufactured by 3M.

Today, he is one of more than 200,000 service members and veterans. sue the conglomerate. 3M stock, which hit a new 52-week low on Wednesday, is one of the worst industrial stocks this year, down more than 16% in 2023 from the previous year. XLI Industrials ETFdown 1.5% since the beginning of the year.

The plaintiffs allege that the 3M earplugs were “defective” and did not protect against hearing loss and tinnitus.

“We used [the earplugs] every time we were close to loud sounds,” Frey, who lives in Seattle, told CNBC. “And at the time, I relied on that hearing protection.”

From 2003 to 2015 Aero Technologies and its parent company 3M manufactured and supplied to the US military Earplugs Combat Arms CAEv2. The plugs were standard for soldiers in Afghanistan and Iraq and were designed to protect the hearing of military personnel during military exercises and during combat.

Each earplug had two ends: the green end was meant to block out all sound. The yellow end, signaling “whisper mode”, was meant to block out loud sounds but allow the user to hear softer sounds such as conversations.

“We’ve been told that by putting on ‘whisper mode’ we can still protect our hearing,” said Frey, who claims to have first noticed hearing problems in 2013.

“I heard the ringing,” Frey recalled. “At first I thought it was a TV turned on. And so I searched and searched the house for the source of the noise before I realized that it was only in my head.”

The 35-year-old man says his hearing problems have worsened over the years. Department of Veterans Affairs records that Frey shared with CNBC show that he was later diagnosed with tinnitus.

“It’s constant,” he said. “It’s a loud ringing in my ears – very similar to buzzing.”

He said the ringing was so devastating that it sometimes kept him awake.

“I don’t look like someone who should probably have the same hearing loss as I did at my age,” he said.

Eric Rucker, a 3M attorney, told CNBC that the company has great respect for the men and women in the military and that their safety has always been a priority.

“The purpose of creating [the Combat Arms earplugs] was to work with the military to solve one of the longest standing problems they have faced: Soldiers will not wear their hearing protection in loud noise and in combat,” Rucker said.

Rooker said the forks were developed in collaboration with the US military. and verified Air Force, Army, National Institute for Occupational Safety and Health, and others.

“All of these tests show that Combat Arms earplugs, when properly fitted and used according to instructions, work to protect people’s hearing,” he said.

Rucker acknowledged that military audiologists were “well trained in how to educate people and match people to use earplugs” but argued that “it had to work and protect their hearing under conditions where the use of these earplugs was appropriate.”

After filing a whistleblowing suit in 2016accusing 3M of selling “dangerously defective” earplugs, the company agreed to pay $9.1 million to the Justice Department resolve charges without admitting responsibility.

Shortly thereafter, hundreds of thousands of other service members flooded in with new suits.

Today, the lawsuits have been consolidated in federal court in Florida, creating what some are calling largest mass crime in US historyoutperforming even multi-district lawsuits involving Johnson and Johnson talc products.

3M has lost 10 of the 16 cases it has taken to court, and to date, 13 plaintiffs have been awarded a total of $265 million.

“Several preliminary tests have been carried out. Unfortunately, Aearo and 3M were unable to provide all the evidence regarding the original design of the product, military involvement in the development of the product, all questions regarding instructions. how to use the product and how well the product performs, including some testing information that was excluded from some testing,” Rucker said.

“All of this is on appeal. And we hope that the decisions on the appeals will lead to the disclosure of more of this information,” he added.

3M recently released new data this shows that 90% of a group of 175,000 plaintiffs are not deaf according to medically accepted standards, as reported by the US Department of Defense. Leading lawyers for the plaintiffs call the data a “distortion of the truth.”

“3M deliberately misrepresented this data by relying on hearing standards that do not measure frequencies most affected by noise, obscuring the hearing impairment suffered by veterans,” said Brian Ailstock and Chris Seeger, co-lead advisors to the military and veterans, in a statement. joint statement.

3M disagreed with these claims, telling CNBC, “The data supports what 3M has argued throughout this litigation: the second version of the Combat Arms ear plugs was safe and effective to use. This has been verified by every independent third party that has tested the headphones. product, including Army Research Laboratory, Air Force Research Laboratory, NIOSH, and others.”

Mizuho chief executive Brett Linzi wrote in a note to customers that “Even the lowest level of previously settled Combat Arms lawsuits (or even half that amount) is in line with some pretty hefty liabilities that 3M may have to resolve.”

According to one Wall Street analyst, 3M’s liability risk could potentially run into the billions.

“Count up the number of plaintiffs that are over 200,000 and take the average settlement — simple math will give you between $10 billion and $20 billion,” JPMorgan analyst Steven Tusa told CNBC. 3M told CNBC that the estimate was “totally speculative.”

“We will continue to defend cases. But in the vast majority of these lawsuits, there is no complete information,” Rucker said.

In a court maneuver that was supposed to pay 3M damages, the company’s attorneys tried to put its Aearo Technologies subsidiary under bankruptcy protection and set up a $1 billion trust to settle the claims. The military personnel who sued 3M accuse the company of using the bankruptcy to protect itself and have asked the judge to dismiss it.

A decision on this potential layoff is scheduled for April. Oral arguments in favor of an appeal against the original trials are scheduled for May 1.

As for Frey, he expects his case to go to trial by the end of the year.

“It really pisses me off,” Frey told CNBC, accusing 3M of “trying to get away from bankruptcy or with these arguments to try and avoid responsibility for what they did.”