3M Co. should be blocked from spinning off its health care business and paying shareholder dividends in order to preserve money that soldiers suing the industrial conglomerate expect to win, according to a new federal lawsuit, Bloomberg News reported. A group of soldiers who claim faulty 3M earplugs damaged their hearing want a judge to ensure that the company has enough assets to pay tens of billions of dollars in judgments it could lose in the future. The company faces more than 200,000 lawsuits from veterans who used the earplugs. The complaint, filed in Pensacola, Florida, accuses 3M of trying to protect valuable assets in its health care business from being used to pay soldiers who win their cases. Verdicts against 3M in a handful of initial trials shows that the company may be forced to pay out at least $82 billion, according to the complaint. A representative of the company did not immediately respond to a request for comment. The company has said it is willing to set up a trust fund with $1 billion to pay legitimate claims. 3M has been fighting the claims in federal court in Pensacola for about 3 years. A federal judge is overseeing the initial, procedural steps needed to prepare the lawsuits for separate jury trials that would take place in other courts. Read more.
3M Co. plans to eliminate jobs as part of a broader cost-cutting drive in response to the slowing economy, according to internal communications, Bloomberg News reported. The move comes just days after 3M suffered a setback over a key legal strategy designed to mitigate mounting liabilities and as it faces an array of other challenges, ranging from inflationary woes to sluggish growth. Michael Vale, head of 3M’s safety and industrial division, disclosed the planned cuts in a message to employees of the unit. “The business can’t avoid this tough necessity,” he said in the communication, which was reviewed by Bloomberg News. The scope of the workforce reduction couldn’t be immediately determined, but in the memo Vale said other parts of the company would see similar actions. 3M, which makes everything from dental adhesives to Post-it notes, employed about 95,000 people at the end of 2021, according to securities filings. The multinational manufacturer has underperformed in recent years amid supply-chain snags, currency fluctuations and rising costs. 3M said in July it will spin off its health-care operation, which accounted for almost a quarter of sales. Management also cut its full-year sales and profit outlook. It also potentially faces billions of dollars in future costs tied to environmental liabilities and lawsuits alleging that it sold faulty combat earplugs to the U.S. military that led to hearing damage. A bankruptcy judge last week rejected 3M’s attempt to use controversial bankruptcy rules to halt those claims, allowing them to proceed to trial. 3M has said it plans to appeal the ruling. Read more.
