3M announced that it has reached an agreement with the court-appointed negotiating plaintiffs' counsel to resolve the Combat Arms Earplug litigation against Aearo Technologies (Aearo) and 3M. Under the agreement, 3M will contribute a total amount of $6.0 billion between 2023 and 2029, which is structured to include $5.0 billion in cash and $1.0 billion in 3M common stock.
This agreement, reached through the mediation process that 3M has previously disclosed, is structured to promote participation by claimants and is intended to resolve all claims associated with the Combat Arms Earplug products. 3M reports that the agreement includes all claims in the multi-district litigation in Florida and in the coordinated state court action in Minnesota, as well as potential future claims. The Florida and Minnesota courts are entering orders to support implementation of the agreement.
According to 3M, the agreement is not an admission of liability. The company stated that the products at issue in the litigation are safe and effective when used properly. 3M also stated that it is prepared to continue to defend itself in the litigation if certain agreed terms of the settlement agreement are not fulfilled.
As a result of the agreement, the company will record a pre-tax charge of approximately $4.2 billion in the third quarter of 2023, representing the $5.3 billion pre-tax present value of contributions under the agreement net of 3M's existing accrual of approximately $1.1 billion related to this matter. This charge will be reflected as an adjustment in arriving at 3M's results, adjusted for special items. Additional details of the agreement, including the anticipated payment schedules provided that certain conditions are met, will be included in 3M's filings with the Securities and Exchange Commission.
Aearo and 3M are actively engaged in insurance recovery activities to offset a portion of the settlement payments, and Aearo initiated insurance recovery litigation against its carriers in June related to the litigation.
The settlement comes months after 3M agreed to pay $10.4 billion to fund public water suppliers that have detected per- and polyfluoroalkyl substances in their water supply.
Learn more about 3M at www.3m.com.