Product News and Recalls

3M Continues Bankruptcy Play to Dodge Earplug Claims

3M moves ahead with bankruptcy shield play in defective earplug litigation“We have great respect for the brave men and women who protect us and remain committed to the military as an active partner and valued customer going forward.” This was the statement made by 3M chairman and chief executive Mike Roman when he announced that the company was moving forward with its plan to declare a subsidiary bankrupt to shield 3M from further litigation over its sale of earplugs to the United States government that it knew to be faulty.

Finance journal Financier Worldwide notes that the bankruptcy declaration will not affect either 3M or Aearo Technologies in any way. Operations for both companies will continue as usual, “without interruption or disruption to its customers, vendors, and employees.”

If the notion of a corporation using the American legal system to dodge responsibility for the harm it caused to consumers seems like “just another day,” that’s because it is. 3M is far from the first company to use corporate finance law to put a wall between it and those it hurt. The move is immediately reminiscent of Project Plato; the Johnson & Johnson effort to cut losses related to the presence of asbestos in its talc products. The only difference between the two is that J&J spun up a company to bear its liability burden and then immediately declared that company bankrupt.

For all intents and purposes, Aearo Technologies is a completely solvent company with no accrued liabilities at the time of the bankruptcy filing. 3M’s argument, however, is that the bankruptcy of a subsidiary should extend the same bankruptcy protections to the parent company. Chief among those protections is an immediate stop to any liability litigation it might be facing. Lawyers for servicemembers who will now face a life of hearing loss and debilitating tinnitus have called the move exactly what it is: a “sham” and a “contrivance.”

Unfortunately, it is also just another day of corporations using their unlimited reach and resources to ensure that their profits are put ahead of the needs and safety of the American people.