The Mediation Behind 3M’s $6 Billion Settlement
A week ago, St. Paul, Minn.-based consumer, and industrial goods manufacturing giant 3M Co. announced that it had reached a $6 billion settlement to end claims against it for its Combat Arms Earplug product.
According to the master long form complaint filed in the Northern U.S. District Court of Florida, military veterans and service members alleged that the earplug, manufactured by Indianapolis-based 3M subsidiary Aearo Technologies, was defective, and resulted in hearing loss.
The settlement was reached as a result of court-ordered mediation between the parties, according to the company’s Aug. 29 statement, here.
The deal ends one of the largest multi-district litigation tort claims in history. It was overseen by Northern Florida U.S. District Court Judge M. Casey Rodgers, in Pensacola, Fla., with complementary civil cases in Minnesota. 3M Products Liability Litigation, MDL No. 2885. (See Master Docket on the court’s website here.)
The MDL began in 2019 and has seen 3M pay out over $200 million across 16 trials, with mediation occurring concurrently with the cases, according to the website of Pensacola, Fla.’s Aylstock, Witkin, Kreis, & Overholtz PLLC, one of the law firms representing the plaintiffs.
To assist this process, the court appointed Ellen Reisman, a name partner in Washington, D.C.’s Reisman Greene Theis, who focuses on resolving complex mass tort litigation, as a special master to mediate settlement discussions. The court later brought in retired former N.J. federal district court judge Mark Falk, counsel to Newark, N.J.’s Walsh Pizzi O’Reilly Falanga, and later, after installing a formal MDL mediation protocol, mass torts mediator Randi S. Ellis, who heads her own firm in Baton Rouge, La., to assist in the process.
The settlement is a remarkable turnaround from what was described in a court order by Judge Rodgers, on Jan. 18. See Daniel Wilson, “3M Earplug MDL Judge Ends Mediation After Impasse,” Law360 (Jan.19) (available with subscription here). According to that order, “3M has now advised the Court that it has no desire to reach a global resolution in the MDL and is absolutely determined to resolve all CAEv2 claims solely through the bankruptcy system.” (Emphasis in the article.)
As a result, the court order declared that the parties had reached an impasse of the MDL mediation and formally terminated the proceedings. But Ellis was told to continue in her mediator role and given discretion to continue facilitating informal settlement efforts.
On Jan. 21, the co-mediator—at this point, Ellis and Delaware U.S. Bankruptcy District Court Judge Christopher S. Sontchi--reported in a statement filed in bankruptcy court that they disagreed with Judge Rodgers’ assessment that there was an impasse and provided an update noting that the parties would have mediation talks in early February. In re: Aearo Technologies LLC, et al, 22-02890, No. 1008.
On May 19, 3M CEO Mike Roman was ordered by Judge Rodgers to be present at mediation sessions with the service members’ settlement committee. In re: 3M Combat Arms Earplug Products Liability Litigation No. 3740.
Then, on June 9, Judge Jeffrey J. Graham of the U.S. Bankruptcy Court for the Southern District of Indiana released a ruling that Aearo Technologies could not seek bankruptcy relief, thereby dealing a harsh blow against 3Ms attempts to shift liability off itself. In re: Aearo Technologies LLC, 22-02890, No. 1744.
When a settlement was finally reached for the nearly 260,000 plaintiffs on Aug. 29, the terms mandated that 3M contribute a total of $6 billion between 2023 and 2029, with $5 billion in cash and $1 billion in 3M common stock, according to 3M’s Aug. 29 8-K filing, available on the U.S. Securities and Exchange Commission’s website here.
Details on the settlement deal are being worked out under Judge Rodgers’ orders, which included a requirement that the claimants disclose any third-party funding agreements which would require the sharing of the settlement funds.
What is likely, however, is that any further developments will again require the assistance of mediators in order to avoid continued lengthy and contentious litigation. Perhaps the most salient takeaway is that mediation is capable of obtaining similar monetary compensation to those expected from traditional litigation and juries.
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The author, a second-year law student at the Northeastern University School of Law in Boston, is a Fall 2023 CPR intern.
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