Johnson & Johnson May Have To Increase The 9 Billion Dollar Talc Cancer Settlement Offer If Bankruptcy Is To Be Taken Seriously
Bankruptcy is argued to be a way to expedite a settlement while also allowing corporations to avoid large punitive damage awards
Monday, March 18, 2024 - Johnson & Johnson's third attempt at talcum powder cancer bankruptcy is sure to fail according to legal experts at the Insurance Journal. The publication recently put out a report outlining the apparent intention of the talcum powder company to file for bankruptcy in the state of Texas, home to the controversial Texas Two-Step bankruptcy scheme, and a state that is notoriously lenient in protecting corporate interests over the best interests of consumers. Many argue that should Johnson & Johnson, a company that is in no way in financial distress, be allowed to file bankruptcy, it would encourage other companies that find themselves the defendant in mass-tort personal injury or wrongful death lawsuits to do the same. Doing so would effectively eliminate corporate responsibility for consumer health and safety and transfer responsibility to the consumer.
Bankruptcy may offer a faster vehicle for settling mass torts but also gives corporations a way to avoid lottery-like punitive damage awards like the one in 2018 where 22 Missouri women with ovarian cancer were awarded $4.89 billion in compensatory and punitive damages. Critics argue that Johnson & Johnson's repeated attempts to file for bankruptcy via the subsidiary LTL Management, particularly utilizing the Texas Two-Step strategy, exploit legal loopholes to the detriment of claimants. This strategy allows a company to segregate its liabilities from its assets by transferring the former to a newly created subsidiary, which then files for bankruptcy, potentially limiting claimants' compensation. Melissa Jacoby, a University of North Carolina law professor, expressed skepticism about the success of a third bankruptcy attempt, asserting that the chances "should be zero." She pointed out the ethical implications, stating, "Pursuit of accountability outside of bankruptcy will be halted," emphasizing the potential delay in justice for the claimants, according to The Insurance Journal. An attempt at bankruptcy once again, could put more than 50,000 talcum powder cancer lawsuits on hold for yet another year.
The legal actions taken by Johnson & Johnson have not been without criticism. The pharmaceutical company has filed for bankruptcy three times now, but its first two bids were dismissed by New Jersey courts because LTL Management was not in financial difficulty and so did not qualify for bankruptcy protection. This has sparked a wider debate over the use of bankruptcy filings in large tort cases, casting doubt on how to strike a compromise between a business's right to pursue legal action and the claimants' right to just recompense. Despite the controversy surrounding its legal strategies, Johnson & Johnson maintains that its talc-based products are safe. The company has defended its products vigorously in court and points to its decision to replace talc-based products with cornstarch-based versions in the US and Canada as evidence of its commitment to consumer safety, not an admission of guilt. Johnson & Johnson has stated, "We are working hard toward a resolution of our current and future talc cases," emphasizing its ongoing efforts to settle the litigation comprehensively, wrote The Insurance Journal.
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