Bankruptcy Court Denies 3M Bankruptcy Claim

Litigation over defective earplugs will proceed

Christina Grube

(MASS TORT NEWS) Indiana bankruptcy court denied 3M subsidiary Aearo Technologies LLC claim of bankruptcy, forcing 3M to proceed settling over 200,000 injured plaintiff cases. Judge Jeffrey J. Graham ruled that Aearo’s bankruptcy does not bar lawsuits against its financially stable parent company, 3M. 

3M released a statement disagreeing with Friday’s ruling, maintaining that chapter 11 proceedings would “offer a more efficient, equitable and expeditious pathway to resolution of these matters for all parties.”

Aearo filed for bankruptcy in late July in an attempt to settle MDL claims against a defective earplug model, the Combat Arms Earplugs Version 2 (CAEv2). The attempted filing comes after 3M lost 10 out of 16 total bellwether trials. 

District Judge M. Casey Rodgers, overseeing the Florida based MDL, chides the 3M corporation for “naked duplicity” in attempting to use a bankruptcy claim as a get-out-of-jail-free card. 

Anne Andrews of Andrews Thornton explained to LegalCast how Fortune 500 companies now use bankruptcy filings to avoid plaintiff litigation, specifically noting Johnson & Johnson Talcum MDL 2738 and Boy Scouts of America bankruptcy claim. 

“I’ve been predicting this for years,” Andrews said. “I think people thought I was crazy because ‘how can we ever replace the civil justice system and the 7th amendment right to a jury trial with bankruptcy,’ but guess what—that’s exactly what’s happening.”

Less than a year ago, Rep. Jerrold Nadler proposed the Nondebtor Release Prohibition Act (H.R. 4777) which would legally prevent companies from transferring bankruptcy debt and litigation to subsidiaries then declare the subsidiary bankrupt. 

“The bankruptcy system is supposed to work for everyone,” said Nadler, “but in many cases it works only for the powerful, and too often it works best for big corporations and the very wealthy who have not even filed for bankruptcy but have figured out how to twist the system to obtain blanket immunity for their wrongdoing.” 

Jennifer Hoekstra, Lead Counsel for 3M plaintiffs, told MTN “The SDIN Bankruptcy ruling on Friday was an amazing victory for the 230,000 US service members who have been harmed by 3M’s deception, greed and attempts to hide behind its subsidiary.”

“While we understand the Aearo Debtors and 3M intend to appeal the ruling,” Hoekstra continued, “we will continue working on behalf of our clients both in the MDL and in the Bankruptcy court.”

3M US Bankruptcy Docket Information:

U.S. Bankruptcy Court
Southern District of Indiana
Bankruptcy Petition #: 22-02890-JJG-11
In Re: Aearo Technologies LLC

Assigned to: Jeffrey J. Graham
Chapter 11
Voluntary
Asset
Creditors: 59
Date filed: 07/26/2022
341 meeting: 09/06/2022 10:00 AM
Deadline for filing claims (govt.): 01/23/2023

Debtor: Aearo Technologies LLC
7911 Zionsville Road
Indianapolis, IN 46268
MARION-IN
Tax ID / EIN: 13-3840356
fka E-A-R Specialty Composites
fka Aearo Company
fka Aearo Technologies

Kroll portal for the 3M Bankruptcy (formerly Duff & Phelps – Prime Clerk)