United States of America et al v. 3M Company

COMPLAINT against 3M Company (Filing fee $ 400 receipt number 0420-6549289.), filed by Moldex-Metric Inc.

District of South Carolina, scd-3:2016-cv-01533

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3: 16 - CV - 01533 - DCC Date Filed 05 / 12 / 16 Entry Number 1 Page 1 of 25 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA COLUMBIA DIVISION CASE NO. 3: 16 - 1533 - MBS UNITED STATES OF AMERICA ex rel. MOLDEX - METRIC, INC ., ORIGINAL COMPLAINT FILED IN CAMERA Plaintiff / Relator, VS. 31U.S. C. SEALED PURSUANT TO § 3730 (b) (2) 3M COMPANY, JURY TRIAL DEMANDED Defendant. 3: 16 - CV - 01533 - DCC Date Filed 05 / 12 / 16 Entry Number 1 Page 2 of 25 FILED UNDER SEAL PURSUANT TO 31U.S. C. § 3730 (b) (2) INTRODUCTION This is an action by qui tam Plaintiff / Relator Moldex - Metric, Inc. ("Moldex"), in the nam name of the United States Government, to recover penalties and damages arising from false eCOV statements made by Defendant 3M Company ("3M " or the " Company ' ') to the Government Venn regarding its dangerously defective dual - ended Combat ArmsTM earplugs, which 3M sold to theU.S. military for more than a decade without its knowledge of the defect. Plaintiff / Relator's claims reveal the protracted fraud perpetrated on the military by 3M, whose dual - ended Combat ArmsTM earplugs — which were standard issue in certain branches of the military during foreign conflicts between 2003 and 2015 _ have likely caused thousands of soldiers to suffer significant hearing loss and tinnitus in addition to exposing millions to the risk caused by 3M's defective earplugs. The indirect cost to the public of 3M's fraud has been enormous. In addition to funding the military's repeated purchases of the defective earplugs from 3M for more than a decade, tax payers must shoulder the massive expense of treating veterans with hearing damage and impairment, which represents the largest ongoing medical cost to the military. Plaintiff / Relator Moldex alleges as follows: THE PARTIES 1. Moldex is a family - owned business organized and existing under the laws of California with its principal place of business in Culver City, California. It is in the business of designing, manufacturing and selling worker safety products, including hearing protection As 3M explains in a press release trumpeting its sales of its Combat ArmsTM earplugs to the military, " [ t ] innitus, often referred to as " ringing in the ears, ' and noise - induced hearing loss can be caused by a one - time exposure to hazardous impulse noise, or by repeated exposure to excessive noise over an extended period of time. " Ex. 1, 3M Newsroom, 3M Hearing Protection Devices Now Added to the Federal Procurement List (Aug. 30, 2012), available http: / / solutions. 3m. com / wps / portal / 3M / en US / 3M - Defense - US / Defense / About - 3M Defense / News / (last visited Apr. 25, 2016) . 3: 16 - CV - 01533 - DCC Date Filed 05 / 12 / 16 Entry Number 1 Page 3 of 25 FILED UNDER SEAL PURSUANT TO 31U.S. C. § 3730 (b) (2) products and respirators. In 2011, Moldex introduced a non - linear dual - mode earplug, called BattlePlugs® . Moldex's BattlePlugs® provided the first actual competition to 3M's Combat ArmsTM earplugs in the market for non - linear earplugs approved for purchase by the military. 2. 3M Company is a corporation organized and existing under the laws of the state of Delaware with its principal place of business in St. Paul, Minnesota. Among other things, it is in the business of designing, manufacturing, and selling worker safety products, including hearing protectors and respirators. 3M has a dominant market share in virtually every safety product market, including hearing protection. 3M is one of the largest companies in the country. JURISDICTION AND VENUE 3. This action arises under the False Claims Act, 31U.S. C. § 3729, et seq. 4. Jurisdiction over this action is conferred upon the Court by 31U.S. C. § 3732 (a) and 28U.S. C. § 3130 in that this action arises under the laws of the United States. 5. Venue is proper in this District pursuant to 28U.S. C. § 1391 and 31U.S. C. $ 3732 (a) because Defendant 3M transacts business in this District and can be found within the United States. 6. Venue is also proper because this District has general jurisdiction over 3M due to its extensive, long - standing presence. Defendant 3M operates manufacturing facilities at 1400 Perimeter Road, Greenville, South Carolina 29605 - 5467, which includes at least two plants. 3M has operated facilities at this location since 1974, and in 2007 began a $ 100 million ongoing expansion project. Ex. 3, History of 3M Greenville, available at http: / / solutions. 3m. com / wps / portal / 3M / en _ US / Greenville / Plant / Facility / History ! (last visited May 6, 2016) . 3M touts the benefits of its active participation in the Greenville community on its website. Ex. 4, Community Involvement, available at 3: 16 - CV - 01533 - DCC Date Filed 05 / 12 / 16 Entry Number 1 Page 4 of 25 FILED UNDER SEAL PURSUANT TO 31U.S. C. § 3730 (b) (2) http: / / solutions. 3m. com / wps / portal / 3M / en _ US / Greenville / Plant / Community / Involvement / (last visited May 6, 2016) . 7. Venue is also proper because, in addition to the statutory bases, this District has specific jurisdiction over false statements and claims related to 3M's distribution of the Combat Arms earplugs to South Carolinian soldiers. Starting in 2004, all soldiers deployed to Iraq and Afghanistan were issued Combat Arms earplugs. Ex. 5, Mcllwain, D. Scott et al ., Heritage of Army Audiology and the Road Ahead: The Army Hearing Program, AMERICAN JOURNAL OF PUBLIC HEALTH, Vol. 98 No. 12 (Dec. 2008) . South Carolina is home to several Army, Air Force, Navy, and Marine military bases from which soldiers were trained and deployed to these combat zones including Fort Jackson, Shaw Air Force Base, the Marine Corp Recruiting Depot at Parris Island, and the Naval Weapons Station Charleston. With respect to Fort Jackson, for example, 3M was the supplier of Combat Arms earplugs prior to Moldex assuming the contract in 2012. FACTUAL ALLEGATIONS I. 3M'S DEFECTIVE COMBAT ARMSTM EARPLUGS 3M's dual - ended Combat ArmsTM earplugs 8. 3M's dual - ended Combat ArmsTM earplugs, which are non - linear, or selective attenuation, earplugs, were designed to provide soldiers with a single set of earplugs that offer them two options for hearing attenuation depending upon how the plugs are worn. If worn in the 3: 16 - CV - 01533 - DCC Date Filed 05 / 12 / 16 Entry Number 1 Page 5 of 25 FILED UNDER SEAL PURSUANT TO 31U.S. C. § 3730 (b) (2) " closed " or " blocked " position (olive end in), the earplugs are supposed to block sound like traditional earplugs. If worn in the " open " or " unblocked " position (yellow end in), the earplugs are supposed to block, or at least significantly reduce, loud impulse sounds of battlefield explosions, while still allowing the wearer to hear quieter noises such as commands spoken by fellow soldiers and approaching enemy combatants. These earplugs were originally created by a company called Aearo Technologies ("Aearo") . 3M acquired Aearo in 2008 (and thus any liability associated with its past conduct) and hired the employees at Aearo that developed and tested the defective earplugs. These 3M employees were aware of the defects as early as 2000, several years before 3M / Aearo became the exclusive provider of the earplugs to the military. 9. As known to 3M / Aearo at the time it bid for and won the underlying Indefinite Quantity Contracts ("IQCs") that made it the exclusive supplier of selective attenuation earplugs to the military between 2003 and 2012, these earplugs have dangerous design defects that can cause them to loosen in the wearer's ear, imperceptibly to the wearer and even trained audiologists visually observing a wearer, thereby permitting damaging sounds to enter the ear canal by traveling around the outside of the earplug while the user and / or audiologist incorrectly believes that the earplug is working as intended. Because the stem of the dual - ended earplug is too short, it is difficult to insert the plug deeply into some wearer's ear canals and obtain a proper fit. Specifically, when the earplug is inserted into the ear according to standard fitting instructions, the basal edge of the third flange of the non - inserted end of the earplug is prone to press against some wearers ' ear canals and fold back to its original shape, thereby loosening the * ear ca Yame seal in their ear canals. The defect has the same effect when either end is inserted because the earplugs are symmetrical. In either scenario, the effect is that the earplug may not maintain a a. 3: 16 - CV - 01533 - DCC Date Filed 05 / 12 / 16 Entry Number 1 Page 6 of 25 FILED UNDER SEAL PURSUANT TO 31U.S. C. § 3730 (b) (2) tight seal in some wearers ' ear canals such that dangerous sounds can bypass the plug altogether thereby posing serious risk to the wearer's hearing unbeknownst to him or her. 10. These dangerous design defects were known to Aearo in 2000 (and later 3M) when it completed testing of the dual - ended Combat ArmsTM earplugs. This is evidenced by the fact that when Aearo retested the closed end of the earplug starting in February 2000, as detailed below, its personnel rolled back the non - inserted yellow flanges in order to mitigate the loosening effect of the defect caused by the short stem. Further, the 3M / Aearo scientist who oversaw and documented this testing, and the 3M / Aearo lab technician who conducted the testing, are still employed by 3M to this day. 11. Despite this knowledge, in 2003, Aearo submitted a bid in response to the military's Request for Proposal ("RFP") to supply large quantities of these defective earplugs and entered into an IQC pursuant to which it became the exclusive supplier of earplugs to the military. When it responded to the RFP, Aearo was required to expressly certify that the earplugs complied with the Salient Characteristics of Medical Procurement Item Description ("MPID") of Solicitation No. SP0200 - 06 - R - 4202. See Ex. 2, Solicitation No. SP0200 - 06 - R 4202. The earplugs did not, however, comply with those Salient Characteristics, which Aearo knew at the time it made its certification. Thus, Aearo's response to the RFP constitutes a false statement or record and each of Aearo's and later 3M's subsequent requests for payment pursuant to the IQC resulting from these false statements or records constitutes a false claim within the meaning of the False Claims Act ("FCA") . Each of Aearo's and 3M's subsequent responses to the military's RFPs and the resulting IQC payment requests constitute additional, distinct false statements and claims by 3M / Aearo for which 3M is now liable. 3: 16 - CV - 01533 - DCC Date Filed 05 / 12 / 16 Entry Number 1 Page 7 of 25 FILED UNDER SEAL PURSUANT TO 31U.S. C. § 3730 (b) (2) II. THE SALIENT CHARACTERISTICS OF THE MILITARY'S RFPs 12. Since 2003, 3M / Aearo has been awarded multiple IQC's in response to RFPs, n awa including but not limited to SP0200 - 06 - R - 4202, issued by the military requesting bids to supply non - linear, selective attenuation earplugs. In response to each of these RFPs, 3M / Aearo was ATM required to certify that its dual - ended Combat ArmsTM earplugs complied with the Salient Characteristics of the associated MPIDs. The pertinent Salient Characteristics set forth in the MPID, which was uniform across all RFPs, in relevant part, are as follows: 2. 1. 1. Ear plugs shall be designed to provide protection from the impulse noises created by military firearms, while allowing the wearer to clearly hear normal speech and other quieter sounds, such as voice commands, on the battlefield. 2. 2. 2. The sound attenuation of both ends of the ear plugs shall be tested in accordance with ANSI S3. 19. . . . 2. 4 Workmanship. The ear plugs shall be free from all defects that detract from their appearance or impair their serviceability. 2. 5 Instructions. Illustrated instructions explaining the proper use and handling of the ear plugs shall be supplied with each unit. . . . Ex