Johnson & Johnson Is Seeking Its Talcum Powder Bankruptcy Reversal To Be Reheard
The company argues that without segragating their talc liabilities in bankruptcy the parent company itself could face bankruptcy
Thursday, March 16, 2023 - J & J is seeking to have a rehearing by the full Third Circuit Court of Appeals of the talcum powder bankruptcy citing that the issue was too big and impactful on the economy to be trusted to a 3-judge panel and that Johnson & Johnson qualified as being under financial distress. "The idea was to compensate claimants in an organized manner while allowing some efficiency and predictability in the payment regime rather than a windmill of lawsuits and the potential for the huge verdicts that typically mark similar litigation. The three-judge panel dismissed the plan on grounds that J&J had funded LTL so generously that it could not be considered in financial distress." Johnson & Johnson's (J&J) attempt to spin off their talcum powder legal liabilities into a shell company and then declare it bankrupt was overturned last month by a 3-judge panel of the Court of Appeals. The decision delighted plaintiffs with cancer caused allegedly by using Johnson's Baby Powder. Talcum powder lawsuits were put on hold while the court of appeals decided whether or not the companys bankruptcy scheme was legitimate. Had the bankruptcy plan been allowed to stand plaintiffs feared that they would be pressured to accept only a fraction of the amount of money they sought in open court. Had the scheme succeeded, the bankruptcy judge and mediators would determine who was eligible for a settlement, the amount of settlement, and most importantly, when it would be paid. A high percentage of Johnson & Johnson talcum powder ovarian cancer plaintiffs will die within the next five years from ovarian cancer and mesothelioma. Forcing them to wait for a settlement could prevent them from ever seeing justice. The reversal decision unshackled more than 38.000 lawsuits that presumably will now be allowed to be filed that allege using Johnson's Baby Powder caused ovarian cancer or mesothelioma.
According to the Wall Street Journal, J & J created a subsidiary called LTL management and placed its talcum powder legal liabilities in it, and then promised to create a $61.5 billion settlement fund to compensate a percentage of the 38,000 claims that passed muster. "The idea was to compensate claimants in an organized manner while allowing some efficiency and predictability in the payment regime rather than a windmill of lawsuits and the potential for the huge verdicts that typically mark similar litigation. The three-judge panel dismissed the plan on grounds that J&J had funded LTL so generously that it could not be considered in financial distress," the WSJ reported. The bankruptcy appeals court overturned Judge Michael Kaplan's decision to allow the LTL bankruptcy. Judge Kaplan agreed that the bankruptcy court could allow the company in legal trouble to protect its other lines of business from the potential of excessive, lottery-like punitive damage awards. Johnson & Johnson proceeded to their LTL management bankruptcy strategy immediately after the US Supreme Court failed to hear their appeal of a $4 billion jury award to 22 plaintiffs with ovarian cancer. The WSJ argues that the reversal of Judge Kaplan's bankruptcy decision should be reheard because J & J were in fact in financial distress under the weight of potentially hundreds of billions of dollars of jury awards.