02.02.23

In Amicus Brief, Durbin And Colleagues Call On Seventh Circuit To Reject 3M’s Attempt To Use Bankruptcy To Evade Accountability To Military Veterans

WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, led a group of Senate and House Democratic colleagues in submitting an amicus brief in a bankruptcy case before the Seventh Circuit Court of Appeals, in support of 231,000 military veterans who are seeking restitution from 3M and its subsidiary Aearo Technologies for allegedly manufacturing defective earplugs. The company and its subsidiary attempted a complex maneuver similar to the infamous “Texas Two-Step” to dodge the veterans’ lawsuits, but a bankruptcy court rejected this attempted evasion and 3M and its subsidiary appealed to the Seventh Circuit. The Court’s decision in this case will have wide-reaching implications for consumers who have been harmed by dangerous products.

In the brief, Durbin and his colleagues write that Congress did not intend for wealthy and powerful corporations to use the bankruptcy system to short-circuit civil litigation against them. They argue instead that the Bankruptcy Code was designed to provide individuals and companies with a fresh start following financial calamity, and that allowing wealthy corporations like 3M and Johnson & Johnson to exploit loopholes to evade accountability“would corrupt the fundamental purpose of the bankruptcy system itself.”

The Members further contend that: “3M’s attempt to force [a stay of litigation] through its free-form, atextual gloss on the Code’s provisions would give any giant corporation a roadmap to avoid virtually any mass tort liability by obtaining a bankruptcy-like absolution without providing bankruptcy-required protections for creditors. That was not the result that Congress intended . . . and it is not a result that this Court should permit.”

Durbin was joined by U.S. Senators Sheldon Whitehouse (D-RI), Richard Blumenthal (D-CT), Tammy Baldwin (D-WI), Elizabeth Warren (D-MA), and Tammy Duckworth (D-IL), and U.S. Representatives Jerrold Nadler (D-NY-12) and David Cicilline (D-RI-01).

Read the full amicus brief here. 

The amicus brief builds on Durbin’s efforts to close loopholes in the bankruptcy system that are exploited by wealthy and powerful corporations. Earlier this week, Durbin applauded an appellate court ruling in the Johnson & Johnson baby powder case, which rejected the bankruptcy filing by a J&J shell company. Last year, he spoke on the Senate floor and in a subcommittee hearing on this issue. Durbin also has cosponsored the Nondebtor Release Prohibition Act of 2021, which would prevent the use of the “Texas Two-Step” and other cynical maneuvers to exploit bankruptcy law.

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