3M Co. should be blocked from spinning off its health care business and paying shareholder dividends in order to preserve money that soldiers suing the industrial conglomerate expect to win, according to a new federal lawsuit.
(Bloomberg) — 3M Co. should be blocked from spinning off its health care business and paying shareholder dividends in order to preserve money that soldiers suing the industrial conglomerate expect to win, according to a new federal lawsuit.
A group of soldiers who claim faulty 3M earplugs damaged their hearing want a judge to ensure that the company has enough assets to pay tens of billions of dollars in judgments it could lose in the future. The company faces more than 200,000 lawsuits from veterans who used the earplugs.
The complaint, filed in Pensacola, Florida, accuses 3M of trying to protect valuable assets in its health care business from being used to pay soldiers who win their cases. Verdicts against 3M in a handful of initial trials shows that the company may be forced to pay out at least $82 billion, according to the complaint.
A representative of the company did not immediately respond to a request for comment. The company has said it is willing to set up a trust fund with $1 billion to pay legitimate claims.
3M has been fighting the claims in federal court in Pensacola for about 3 years. A federal judge is overseeing the initial, procedural steps needed to prepare the lawsuits for separate jury trials that would take place in other courts.
In the new complaint, the soldiers claim the health care spinoff is a fraudulent transfer because 3M would get nothing of value while still being responsible for paying all of the company’s debts, including any related to the earplugs litigation.
In July, the company put its Aearo Technologies subsidiary into bankruptcy to temporary halt the lawsuits in order to negotiate a deal to set up a $1 billion trust fund for soldiers and end all of the claims. That strategy was upended last month when a bankruptcy judge refused to halt the lawsuits against 3M.
Earlier this week, the judge overseeing the lawsuits in Florida ordered both sides to work with a mediator to try to reach a settlement.
The new case is Richard Valle and Manuel Colon versus 3M Co. 22-17250, US. Bankruptcy Court for the Northern District of Florida (Pensacola). The bankruptcy is Aearo Technologies LLC, 22-02890, United States Bankruptcy Court for the Southern District of Indiana (Indianapolis).
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