More Bad Courtroom News For 3M -- What Might it Mean for Investors??
3M (NYSE: MMM) is currently embroiled in a courtroom saga against U.S. military veterans who claim they suffered hearing impairment stemming from the use of earplugs made by its subsidiary, Aearo Technologies. Aearo filed for bankruptcy protection, which would hasten a settlement and absolve the still- solvent parent company from liability. A judge recently denied that motion. While the company is currently involved in other lawsuits, its earplug case has the potential to balloon into a liability of historic proportions. Here's what it could mean for the stock.
The case originated from 3M's acquisition of military earplug maker Aearo Technology in 2008. The company made two-sided earplugs that soldiers could use to completely block out sound on one side and allow them to hear close conversation when using the other. Aearo faced competition for its military earplug business from a private company named Moldex.
To protect its turf, 3M launched a patent-infringement case against Moldex in 2012, which it eventually withdrew. In response, Moldex launched its own lawsuit against 3M in 2014, alleging that its patent-infringement case was an attempt to put Moldex out of business and eliminate the competitive nature of the earplug market. During the case, Moldex presented evidence that Aearo's earplugs were defective and that 3M continued to sell the faulty earplugs despite knowing of the defects. The evidence also showed that 3M ordered employees to discontinue selling the earplugs only after the evidence was presented in court.
Source Fool.com
