Johnson & Johnson has been sued by a group of cancer victims accusing it of committing fraud through repeated efforts to use a shell company’s bankruptcy to resolve tens of thousands of lawsuits alleging its talc products contained asbestos and caused cancer.
Five plaintiffs who seek to represent more than 50 000 people who have sued J&J over its talc products filed the proposed class action in New Jersey federal court last week, reports Reuters.
They allege that J&J’s bankruptcy strategy put billions of dollars beyond the reach of plaintiffs in an attempt to “hinder, delay and defraud these women and prevent them from ever having their day in court”.
“Johnson & Johnson is playing a dark game of chess with this country’s financial and judicial systems,” said Mike Papantonio, an attorney for the cancer plaintiffs.
J&J’s worldwide vice-president of litigation, Erik Haas, said the lawsuit was a “Hail Mary pass” by plaintiffs’ lawyers who don’t want their clients to vote on the company’s latest proposed bankruptcy settlement.
“Why are they so desperate to stop the vote?” he said. “Our focus has been and will remain reaching a full, fair and final resolution of this litigation.”
Most of the talc lawsuits have been brought by women with ovarian cancer, while other cases involve people with mesothelioma, a deadly cancer linked to asbestos exposure.
J&J has repeatedly said its products are safe, do not contain asbestos, and do not cause cancer.
The company had initially used a corporate manoeuvre called the “Texas two-step” to place its talc liabilities into a new subsidiary that then filed for bankruptcy in 2021. The bankruptcy stopped the lawsuits from progressing against J&J, although it did not file for bankruptcy itself.
That and a second similar attempt to resolve the litigation failed as courts ruled that J&J and its subsidiary were not in financial distress so were not eligible for bankruptcy.
On 1 May, the company it was planning to pursue a third bankruptcy once it gets enough votes to support a $6.48bn talc settlement.
Last week’s lawsuit seeks a ruling that the Texas two-step transaction was fraudulent, because it was undertaken solely to shelter J&J’s assets from the talc litigation.
Subsequent transactions, including J&J’s spinoff of its consumer health business Kenvue, were also fraudulent, according to the lawsuit, which also seeks compensatory and punitive damages.
J&J says the planned third bankruptcy for its unit will be different because it will have support from more than 75% of the people with talc-related claims.
The company has streamlined the proposed third bankruptcy by reaching separate settlements with law firms representing people with mesothelioma, as well as US states that alleged the company failed to warn consumers about the dangers of its talc products.
Litigation against J&J resumed after its second bankruptcy was dismissed. In recent trials, J&J was ordered to pay $45m in a mesothelioma case while winning an ovarian cancer case.
Reuters article – Cancer victims sue J&J over 'fraudulent' bankruptcies (Open access)
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