Johnson & Johnson’s second attempt to resolve tens of thousands of lawsuits over its talc products in bankruptcy has failed, with New Jersey Judge Michael Kaplan ruling that, like the first effort, it should be dismissed because the lawsuits did not put it in immediate “financial distress”.
J&J has vowed to appeal the decision and “vigorously defend itself” against lawsuits that are “specious and lack scientific merit”, reports Reuters.
The company’s first bankruptcy gambit began in 2021, when it offloaded its talc liabilities into a new company, LTL Management, and immediately placed that company into bankruptcy. However, this was dismissed in April after an appeals court ruled that it was not in sufficient financial distress to be eligible for bankruptcy protection.
LTL quickly filed for bankruptcy again, arguing that its second effort has won more support from plaintiffs for a comprehensive settlement of current and future lawsuits alleging that J&J’s Baby Powder and other talc products sometimes contained asbestos and caused mesothelioma, ovarian cancer and other cancers.
Attorneys representing cancer victims, along with the US Justice Department’s bankruptcy watchdog, had called for LTL’s second bankruptcy to be dismissed, describing it as an abuse of national bankruptcy law.
Plaintiffs’ lawyers who opposed the $8.9bn offer said J&J had created the “illusion” of support by signing deals with plaintiffs’ lawyers, who quickly signed up large numbers of clients without ever filing any lawsuits against J&J.
By settling the lawsuits in bankruptcy, J&J could cram down the settlement terms on cancer victims opposed to the deal, and prevent new lawsuits from being filed by people who develop cancer in the future as a result of their talc use, said lawyers opposed to the deal.
LTL’s bankruptcy proceedings have largely paused the 38 000 lawsuits filed before October 2021. Kaplan allowed one case to proceed to trial during LTL’s second bankruptcy, resulting in an $18.8m verdict in favour of a California man who said he developed cancer from exposure to J&J Baby Powder.
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