3M executives must have been thrilled when the whistleblower lawsuit that exposed their sale of defective earplugs to the United States military led to a paltry $9 million fine. For a company whose revenue exceeds $30 billion per year, the fine was essentially a refund of the contract price with no consequences for the deception.
The party, however, appears to be coming to an end as the first lawsuit brought by those actually affected by 3M’s disregard for the safety of American servicemembers has yielded a punitive damage award almost equal to the fine levied by the government of the United States. Three military veterans were each awarded over $2 million by a jury that also awarded them a combined total of $830,500 in compensatory damages meant to cover their medical bills, wages, and pain and suffering.
Wall Street took notice of the verdict as a potential sign of things to come. Generally speaking, a $6 million verdict wouldn’t move the needle on a multi-billion-dollar corporation like 3M. However, the 1.4% plunge in share price after the verdict was handed down may show that investors are also aware of how easily the company was let off the hook by the government’s fine.
Over 200,000 claims of injury exist against 3M for its role in selling defectively designed earplugs to the military. Servicemembers who were issued the earplugs have suffered hearing loss and crippling tinnitus as a result. And when it became clear that the government wasn’t going to react to the situation, the soldiers and other servicemembers who were harmed decided that they needed to take action.
“The evidence is clear,” says the attorneys for the three veterans in this bellwether trial. “3M knew their earplugs were defective, yet they allowed our servicemembers to suffer these life-altering injuries.” 3M has indicated that it will likely appeal the verdict.