Companies Facing Mass Tort Legal Liabilities May Follow Johnson & Johnson Talcum Powder Cancer Bankruptcy Scheme
It is up to a federal appeals court to decide if Johnson & Johnson can shelter their $400 billion company from women with ovarian cancer
Monday, April 4, 2022 - Legal experts think that should Johnson & Johnson's talcum powder bankruptcy plan be allowed to proceed it will open the door for other companies on the losing end of mass tort lawsuits. 3M has lost a series of multi-million dollar bellwether lawsuits to military service members that allege the company sold them defective earplugs that caused permanent, irreversible hearing damage. It is conceivable that 3M could seek to limit further monetary damages from the 250,000 military veterans that have registered to file lawsuits against them. Sanofi Inc. may be tempted to place its Zantac ranitidine cancer liabilities into bankruptcy and effectively deny the people injured by their negligence their day in court. Syngenta could do the same with the paraquat Parkinson's disease lawsuits that have been filed against them and Royal Phillips may do the same with its sleep apnea machine respiratory distress liabilities. Lawmakers are outraged at the Johnson & Johnson bankruptcy scheme saying it represents an abuse of what the bankruptcy court was created to do … that being to restructure the liabilities of the company and make creditors whole while providing the company a fresh start. A couple of years ago, Johnson & Johnson talc supplier Imerys Inc. placed their North American talc mining subsidiary in bankruptcy, sold it to an industrial talc user, and placed millions of dollars into escrow to pay current and future talcum powder cancer claimants. One potential outcome of the Johnson & Johnson plan would be to force J & J to place all of their Johnson's Baby Powder business into receivership and liquidate it like what happened for Imerys. Johnson & Johnson has funded its talcum powder subsidiary with $2 billion.
The Texas Two-Step bankruptcy plan has been adopted by the New Jersey bankruptcy court calling it a more fair and equitable solution for Johnson & Johnson talcum powder cancer plaintiffs. The judge ruled that although his decision was sure to spark outrage from the plaintiff's bar bankruptcy court was more suitable than the existing mass tort system for the 38,000 plus talcum powder lawsuits. The New Jersey bankruptcy judge ruled that "bankruptcy provides the optimal forum to resolve mass tort liability; and found that the implementation of a "Texas Two-Step" divisional merger before the bankruptcy filing did not harm talc claimants. Despite a series of objections by representatives for talc claimants, the bankruptcy court ruled that LTL filed its chapter 11 case in good faith--and not as an improper litigation tactic--and concluded that, as compared with the U.S. tort system, bankruptcy offers both present and future LTL talc claimants the best opportunity to obtain equitable and timely recoveries," according to Mondaq.com. The judge believes that the bankruptcy court will help all of the people in the plaintiffs' pool receive a fair settlement although there would be little pressure on Johnson & Johnson to do so. Sadly, it is in Johnson & Johnson's favor to delay any settlement for as long as possible. Many ovarian cancer claims may expire as plaintiffs die from the disease and the survivors choose not to continue with their lawsuits.