Industrial giant Dow Jones 3M (MmmBloomberg has reached a $5.5 billion preliminary settlement to settle more than 300,000 lawsuits related to defective military earplugs, Bloomberg first reported late Sunday. 3M shares rose before the market opened on Monday.
The earplug lawsuit is said to be the largest class action lawsuit in US history with more than 300,000 claims, according to the Wall Street Journal. Military veterans claim that defective earplugs produced by 3M and its subsidiary Aearo Technologies and issued by the US Army failed to protect them from hearing loss. 3M acquired Aearo in 2008 and is contesting these cases. The company, which is beset by lawsuits, claimed that the earplugs work properly with proper training.
The announced agreement amount will be much less than the $10 billion to $15 billion that some analysts had projected. Negotiations are ongoing and the final payment amount has not been determined. In addition, 3M’s board of directors has not yet voted on the proposed settlement.
In 2018, 3M agreed to pay the US government $9.1 million to resolve allegations that the earplugs were defective because they could loosen imperceptibly during use. Last summer, Aearo declared bankruptcy as a separate company and accepted responsibility for all liability claims. The move was intended to give Aearo leverage in the bankruptcy court to formulate a settlement with the plaintiffs. 3M pledged to pay for Aearo’s settlement.
A US Bankruptcy Court judge in Indianapolis denied the bankruptcy petition in June, claiming that Aearo does not qualify for bankruptcy protection as long as 3M undertakes to pay settlement costs. Aearo plans to appeal that ruling, according to the Wall Street Journal.
3M reached a $10.3 billion settlement agreement last June for polluting the drinking water of cities across the US with “forever chemicals”.
MMM shares were up nearly 6% in early trading Monday. 3M stock is down 17.5% this year through Friday’s close, despite rising 22% in June and July.
As August comes to an end, 3M is one of the worst performers on the Dow Jones Index in 2023. Shares hit a year low of 92.38 at the beginning of June, marking their lowest level since late 2012.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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