3M's stock surges after company says DOD data show 90% of earplug plaintiffs had 'normal' hearing
Yahoo! Finance: Top Stories / 2023-03-01 18:323


Shares of 3M Co. surged Wednesday after the maker of consumer, industrial and healthcare products said the U.S. Department of Defense's records show that the "vast majority" of claimants in litigation over the company's Combat Arms earplugs have normal hearing under medically accepted standards.

The company, which also makes Post-it Notes, N95 masks and Scotch tape, said the DOD data show that almost 90% of the 175,000 plaintiffs in the earplug litigation have "no hearing impairment" under American Medical Association standards.

Under World Health Organization and National Institutes of Health standards, 3M said, the data show that more than 85% of plaintiffs have "normal" hearing.

3M added that for nearly a quarter of the plaintiffs who do have hearing impairment under either AMA or WHO standards, the DOD data show that they reported their condition in hearing tests before they used the Combat Arms earplugs.

The stock MMM, +2.29% rallied 3.5% in midday trading after closing at a five-month low in the previous session. The $3.73 stock-price gain added about 25 points to the Dow Jones Industrial Average DJIA, +0.02%, while the Dow gained 45 points, or 0.1%.

3M has been facing litigation related to the Combat Arms earplugs for the past year, resulting from allegations of "fraudulent misrepresentation and concealment." Some on Wall Street estimated potential liabilities of about $14 billion.

Bryan Aylstock and Chris Seeger, co-lead counsels for the plaintiffs, who are service members and veterans, said in an emailed statement to MarketWatch on Wednesday that 3M's announcement was another attempt by the company to mislead the public. They said the DOD data in fact show that about 85% of the plaintiffs suffer from hearing loss or tinnitus.

"The standards relied upon by 3M in their estimation motion were not even used by their own experts in any of the 16 bellwether trials," Aylstock and Seeger stated. "Of the 13 jury verdicts in favor of plaintiffs totaling nearly $300 million, 11 [plaintiffs] under 3M's scheme would be considered 'unimpaired' — even those who were wearing hearing aids."

In July 2022, 3M said its Aearo Technologies subsidiary, which it acquired in 2008 and which made the earplugs, had voluntarily filed for bankruptcy to help establish a trust as it looked to resolve all claims "determined to be entitled to compensation." 3M has committed $1 billion to the trust and an additional $200 million to fund expenses related to the case and has said it will provide additional funding if required.

In 3M's annual report filed in early February, the company said the bankruptcy and funding of the trust reflected a "change in strategy" for managing the alleged litigation liabilities.

"On February 3, we filed a motion to dismiss 3M's contrived bankruptcy," Aylstock and Seeger said. "3M is a multibillion-dollar corporate enterprise that is not remotely in financial distress, and therefore should not be able to use the bankruptcy system against the service members and veterans it injured."

3M's stock has tumbled 23% over the past 12 months, while the Dow has slipped 1.8%.

Enclosures

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