By Brendan Pierson
(Reuters) -3M on Monday agreed to pay $6.01 billion to settle nearly 260,000 lawsuits by current and former U.S. military service members who say they suffered hearing loss from using the company's earplugs, according to a person familiar with the agreement.
The deal comes after a failed attempt by 3M earlier this year to move the lawsuits, which had grown into the largest mass tort litigation in U.S. history, into bankruptcy court in the hope of limiting its liability.
The money will be paid out mostly over the next five years, the person familiar with the agreement said.
3M shares had risen 5% on Monday on earlier reports that a settlement was imminent. Some analysts' estimates of the company's potential liability from the earplug litigation had been as high as $10 billion.
A 3M spokesperson and lawyers for the service members did not immediately respond to requests for comment.
The Combat Arms earplugs were made by Aearo Technologies, a company 3M acquired in 2008. They were used by the U.S. military in training and combat from 2003 to 2015, including in Afghanistan and Iraq.
Plaintiffs in the lawsuits claim that the company hid design flaws, fudged test results and failed to provide instructions for the proper use of the earplugs, leading to hearing damage.
The lawsuits were consolidated before U.S. District Judge M. Casey Rodgers in Pensacola, Florida federal court in 2019. At its height, the litigation accounted for about 30% of all federal court cases nationwide.
Of 16 earplug cases that have gone to trial, 3M has lost 10, with about $265 million being awarded in total to 13 plaintiffs.
Aearo filed for bankruptcy in July 2022, with 3M pledging $1 billion to fund its liabilities stemming from the earplug lawsuits.
3M argued that the mass tort litigation was unfair because Rodgers had kept scientific evidence favorable to the company out of trials and allowed thousands of "unvetted" claims to swell the court's docket.
However, a bankruptcy judge in June dismissed the bankruptcy, finding that Aearo was not in enough financial distress to justify it.
Monday's settlement comes just two months after 3M announced a tentative $10.3 billion deal with a host of U.S. public water systems to resolve claims of water pollution by per- and polyfluoroalkyl substances, or PFAS, known as "forever chemicals."
That agreement is not final, and 22 U.S. states and territories are seeking to block it, saying it does not adequately hold the company accountable.
(Reporting By Brendan Pierson in New York; Editing by Alexia Garamfalvi and Bill Berkrot)