This week, before a federal judge in Indianapolis, the 3M Co.'s attempt to prevent jury trials of more than 230,000 cases accusing it of hurting US soldiers will be put to the test.
The majority of the claims have been made by veterans who allege the battle weaponry earplugs caused them hearing impairment, and a US bankruptcy judge is expected to consider putting a temporary stop to the cases so that 3M and its bankrupt company, Aearo Technologies, can try to resolve them.
The judge's ruling would be felt throughout the offices of other companies facing a flood of product liability cases, according to a Harvard Law School professor. The judge added that if 3M loses this case, it will probably raise red flags in other corporate boardrooms of businesses looking to take advantage of the bankruptcy system.
The Aearo case employs a technique that is becoming more and more common, whereby profitable businesses utilize insolvency proceedings to compel settlement negotiations with the people who claim their products were detrimental. Both Johnson & Johnson and lumber tycoon Georgia-Pacific have filed for bankruptcy in an effort to consolidate their legal troubles rather than pursue thousands of court cases throughout the nation.
Final court documents from the business and its detractors were due on Monday night. On Wednesday, a temporary stay to some of the litigation was issued by a federal judge in Florida. The bankrupt divisions of J&J and 3M have argued in court that it is difficult to fight each case in front of various jurors across the nation.
The company declared Aearo Technologies in Indianapolis insolvent on July 26. Aearo is automatically entitled to freeze the lawsuits it faces under Chapter 11 regulations, but a court must consent to grant the industrial conglomerate the same protection because 3M did not file for bankruptcy.
Bankruptcy can end years of legal disputes, and their costs, and restore the company's financial stability. In a bankruptcy, victims can still recover money from the corporation, but under different conditions that tend to reduce the likelihood of extremely large, multimillion-dollar judgments.
The troops who are suing 3M contend that Chapter 11 bankruptcy laws were never intended for successful businesses. 3M defended its strategy in the courtroom, asserting that bankruptcy would benefit both the plaintiffs and the business.