Federal appeals court judges appeared skeptical of 3M’s bid to use the bankruptcy of its subsidiary Aearo Technologies to shield itself from nearly 260,000 lawsuits over allegedly defective military-issue earplugs, Reuters reported. Paul Clement, a lawyer for Aearo, urged a three-judge panel of the Seventh Circuit Court of Appeals to reverse a bankruptcy court order allowing the lawsuits to move forward against 3M, even though Aearo is bankrupt. Clement argued that bankruptcy’s so-called automatic stay should apply to 3M as well, because there is “complete overlap” between the facts and legal defenses in earplug lawsuits against the two companies. Aearo, which made the combat arms earplugs, filed for bankruptcy last July, with 3M pledging $1 billion to fund Aearo’s liabilities stemming from the lawsuits that accuse both Aearo and 3M of misrepresenting the earplugs’ effectiveness, leading to hearing damage. Aearo and 3M said the bankruptcy process would facilitate a fair and comprehensive settlement with the plaintiffs. 3M has lost 10 of the 16 cases that have gone to trial so far, with about $265 million being awarded in total to 13 plaintiffs.
