Earplugs Damage Hearing, 3M Hauled in US Courts

Patent suit filed against a smaller competitor led to an old memo and possibly billions in liabilities

A long-running legal battle over allegedly defective earplugs made by 3M Co. MMM -0.94%▼ arose after the company initiated a separate dispute against a smaller competitor, court documents showed.

3M’s effort to protect its military earplug business eventually led 3M to halt deliveries of one model of earplugs, and resulted in years of litigation, millions of dollars in costs and potentially billions in liabilities for the Minnesota-based manufacturing giant, according to court documents and company communications disclosed during the litigation. 3M said it was enforcing its patent rights in filing its suit against its competitor.

The company began court-ordered negotiations with lawyers representing more than 100,000 U.S. military veterans earlier this month, discussing veterans’ claims that the earplugs left them with hearing damage.

3M said the earplugs are safe and effective, and that they work when soldiers are given proper training. 3M has said it is protected from such lawsuits, because the company was delivering products that the military requested.

Lawyers for 3M and the soldiers have completed 16 court-ordered bellwether trials, which are designed to inform potential settlement discussions. Plaintiffs won 10 of those trials, 3M won six and an additional eight were dismissed.

Potential legal liabilities from the earplugs lawsuits, and other litigation, have weighed on 3M shares, analysts said. The company’s stock has declined about 35% over the past 12 months, versus declines of roughly 10% in the Dow Jones Industrial Average and S&P 500 stock indexes.

3M’s expansion into the military earplugs business came via its acquisition of Indianapolis-based Aearo Technologies Inc., which in the 1990s developed a dual-sided earplug: One side reduced all noise, and the other side allowed spoken communication to be heard while still protecting the wearer from loud sounds such as explosions. Aearo’s sales rose as soldiers deployed to the Middle East in the 2000s, and 3M purchased Aearo for $1.2 billion in 2008.

Moldex-Metric Inc., a privately owned California company that had long competed with 3M in industrial safety equipment, in 2011 started selling its own military-grade earplug.

Both companies’ earplugs have two modes, allowing different levels of sounds to be heard. With 3M’s earplugs, wearers turn them around and insert the other side into the ear to allow more or less sound through, while Moldex’s earplugs have a flippable cap.

Moldex’s new product raised concerns among 3M employees, who were worried about a competitor pushing into a high-profit-margin business, according to company emails. One 3M employee in 2011 said the combat earplugs had annual sales of more than $4 million and a profit margin of nearly 90%. In another 2011 email, the employee said enforcing the company’s intellectual-property rights was important to the future of its combat-earplugs business.

“We have a lot to lose by not defending our dominant position in the combat hearing protection market,” the 3M employee wrote in one of the emails. 3M in March 2012 filed a patent-infringement lawsuit against Moldex, alleging that Moldex’s new military earplug infringed on a patent licensed by 3M.

“This lawsuit is a transparent attempt by 3M to misuse the U.S. patent laws to disrupt sales by Moldex,” Moldex said in a court filing at the time.

In 2013, 3M moved to withdraw its patent lawsuit.

The following year, Moldex sued 3M, alleging that its Minnesota-based competitor improperly used the patent lawsuit to try to dominate the military earplug market. 3M denied the allegations.

Moldex Chief Executive Mark Magidson declined to comment on the dispute with 3M.

During the ensuing litigation, lawyers for Moldex obtained an Aearo testing memo that has become a central part of the veteran lawsuits. According to lawyers representing the veterans, the 2000 testing report showed that Aearo knew the earplugs had problems. 3M said it communicated the issues to the military and that they were resolved with proper fitting procedures.

On Oct. 7, 2015, lawyers for Moldex presented the testing reports they had obtained to a 3M hearing-protection employee during a videotaped interview, according to a transcript filed with the court. The next day, 3M ceased delivering that version of the military earplugs, an internal 3M email said.

“Please cease shipping immediately,” a 3M employee wrote in the email.

Moldex in 2016 filed a lawsuit against 3M under the False Claims Act, which allows individuals or companies who believe they know about bad behavior to file suit on behalf of the government. Citing 3M’s testing report, Moldex claimed that 3M’s military earplugs were dangerously defective because they could imperceptibly loosen in the ear. 3M said the earplugs work, and that independent testing paid for by Moldex proves this.

In 2018, 3M agreed to pay $9.1 million to the U.S. government to resolve the Moldex allegations made two years earlier. Of that settlement, Moldex received $1.9 million. In addition, 3M paid $645,000 for Moldex’s legal fees. In 2017, Moldex dropped its other lawsuit against 3M after the two reached a confidential settlement agreement.

Shortly after the 2018 settlement, the first veteran lawsuits were filed.

The military continues to use newer versions of 3M’s combat earplugs, the company said. While discussions between 3M and the lawyers for the veterans began earlier this month, a judge has also ordered lawyers to start preparing 1,500 additional cases for trials that could start as soon as this year.