It’s been a rough year for the industrial conglomerate 3M, the Dow Jones Industrial Average’s ninth worst performer.
Unfortunately, today was more of the same for investors in the company. A U.S. judge ruled that the company must face more than 230,000 lawsuits accusing it of selling defective earplugs to the U.S. military. The faulty products, created by 3M subsidiary Aero Technologies LLC, allegedly caused several hundred thousand veterans’ hearing loss and tinnitus. ⚖️
The company’s subsidiary set aside roughly $1 billion to cover damages related to this issue, but 3M had hoped to navigate around the lawsuits using the legal system. Typically companies that file for bankruptcy will receive an immediate reprieve from any lawsuits. However, today’s ruling says that lawsuits against the non-bankruptcy parent company can continue.
3M intends to appeal the decision and has denied liability. However, investors don’t seem as optimistic, given that the company has lost 10 of the 16 cases that have gone to trial so far, with roughly $265 million in damages being awarded.
Its stock price was down roughly 10% today as investors continue to weigh the potential financial impact of the situation. 🔻