Investors Predict 3M Financial Woes May Increase
The 11th bellwether trial in 3M’s CAEv2 litigation has attracted the speculation of Wall Street investors who predict that the company’s investors may be undervaluing the final costs of this litigation. At the conclusion of this most recent trial, a jury returned with a verdict for two former U.S. Army servicemen of $110 million each.
One notable point about this verdict was the fact that $80 million of the verdicts awarded to each serviceman was in punitive damages. In December 2021, 3M was hit with a $22.5 million earplug verdict, the second-largest damage award in the 3M earplug multidistrict litigation (MDL).
Over 280,000 individuals, mostly former U.S. military veterans, have filed lawsuits against 3M over hearing damage allegedly caused by defective Combat Arms Earplugs version 2 or CAEv2. These earplugs were exclusively contracted for the U.S. military by 3M from 2003 until 2015, making the litigation the largest mass tort in U.S. history.
A Feb. 13 report on 3M earplug litigation by Bloomberg included analysis by two influential market analysts, one of which commented that 3M’s potential liability in the CAEv2 mass tort could reach upwards of $185 billion. That same analysis stated that even the current $33 billion “shadow” of expected legal costs is depressing 3M’s valuation and growth prospects.
Despite the significant size of the plaintiff pool, 3M earplug litigation has flown mostly under the radar of mass media outlets. In comparison to mesothelioma or Roundup lawsuits, 3M CAEv2 litigation has received little attention in the mainstream media. Investors have not openly expressed concern about 3M losing six of the first 11 bellwether trials, each loss resulting in multi-million damage awards.
In comparison, Bayer AG witnessed its share value plummet 44% after acquiring Roundup’s inventor, Monsanto, and losing three high-profile consumer Roundup trials in 2018 and 2019. 3M’s stock has not deflated to the same extent.
According to the Lawsuit Information Center, 3M’s stock price has gone down by approximately 19% since 2018, but the reason is not thought to be correlated with its potential liability in the CAEv2 litigation. The company’s falling share price has more to do with its potential liability over PFAS or “forever” chemicals.
The reporting by Bloomberg marks one of the only times that a major financial news outlet has given press to the massive MDL, which may soon top 300,000 claimants. As with other publicly visible lawsuits, this may influence 3M towards settlement talks.