Federal Judge M. Casey Rodgers has requested to understand the extent to which outside investors backing lawsuits will benefit from a $6 billion settlement established for military veterans who were injured by faulty earplugs manufactured by 3M Co. The disclosure came on the heels of 3M Co.’s announcement of a settlement to resolve the countless claims against the company. Rodgers expressed her apprehension about the role of external funders in the deal, aiming to ensure that veterans aren’t exploited by predatory lending practices.
The nearly 260,000 lawsuits alleging hearing impairment due to defective 3M combat earplugs will be settled as per the resolution. The terms of the agreement involve a contribution of $5 billion in cash and $1 billion in common stock from the company through 2029.
Given a 30-day window, the plaintiffs’ lawyers are required to provide full disclosure on any funding agreements reached with any claimant either prior to or post the settlement, according to the judge’s order. Entering future outside funding agreements without court approval has also been prohibited for both lawyers and claimants.
The private filings must entail details about lenders, loan amounts, interest rates, amongst others. Lawyers are also expected to be ready to discuss the financing arrangements and produce the relevant documents as and when required by Judge Rodgers.
The $13.5 billion litigation finance industry, where investment firms invest in litigation for a share of the award, regards disclosure as a divisive issue. Such a move was similarly made by a federal judge in Ohio in 2018 regarding comprehensive opioid litigation that necessitated in camera disclosure of litigation finance agreements. In mass torts cases, funders often lend to law firms against their complete docket of cases. It remains unclear whether these “portfolio deals” must be disclosed, as per the 3M order.
The case is referenced as In re 3M Products Liability Litigation, N.D. Fla., No. 3:19-md-02885, 8/29/23.
This information was provided by Bloomberg Law.