A Third Attempt At Bankruptcy Could Further Delay Talcum Powder Trials

This report outlines some of the key developments regarding Johnson & Johnson’s attempt at bankruptcy

Thursday, March 14, 2024 - J&J has used the contentious Texas Two-Step bankruptcy plan to protect itself from growing number of baby powder lawsuits during the legal turbulence. To pull off this ploy, the company transfers the assets and liabilities associated with its talcum powder goods to a recently established subsidiary, which then declares bankruptcy. By doing this, J&J hopes to lessen its financial risk and maybe avoid taking responsibility for the harm done to customers. Critics contend that the Texas Two-Step allows corporations to escape their obligations and pay damages to victims of their damaging products, constituting an egregious abuse of the bankruptcy system and an insult to the justice system in general. Lawmakers, consumer advocacy organizations, and legal professionals have opposed the strategy, demanding more control and reform to prevent similar corporate bankruptcy law abuses in the future. Johnson & Johnson is now thought to be in the initial stages of embarking on a third attempt at bankruptcy as it has moved its LTL management subsidiary to Texas. LTL management is the holding company where J&J placed its talcum powder liabilities and about $9 billion in cash to settle all present and future talcum powder cancer claims. The company is aggressively trying to settle claims of mesothelioma out of court. "Johnson & Johnson is trying to resolve some of the thousands of lawsuits filed claiming its talc-based baby powder causes cancer. J&J's in-house lawyer overseeing the talc litigation Eric Haas, said during an investor call that the recent settlements covered cases involving plaintiffs with mesothelioma. In hopes of eventually reaching a global settlement, the company announced that three law firms settled around 100 cases in the first week of December 2023. Haas didn't reveal any further details about the dollar amounts of the settlements, the identity of the law firms involved, or exactly how many people the deal affects," according to Asbestos.com.

Johnson & Johnson's first attempt at bankruptcy was approved by New Jersey bankruptcy court judge Michael Kaplan who said that he thought the bankruptcy court was the best way to ensure that such a large number of plaintiffs (about 50,000 at the time) received a fair compensation. Johnson & Johnson is seeking a settlement largely in an attempt to avoid lottery-like punitive damage awards such as the case where 22 Missouri women with ovarian cancer were awarded an appeal-adjusted $2.1 billion. As was mentioned previously, ovarian cancer is a deadly disease and 7 of the 22 women plaintiffs died while the case was being appealed. The US Supreme Court refused to hear the case and Supreme Court Judge Kavanaugh recused himself. His father. E. Edward Kavanaugh, served as the chairman of the Personal Care Products Council (PCPC), a group formed to lobby the Food and Drug Administration (FDA) regarding talcum powder safety. Salon.com wrote, " If he fails to recuse himself, Justice Brett Kavanaugh will be asked to consider evidence that his father, Ed, helped J&J market such products -- even though they knew they were carcinogenic. Kavanaugh Sr.'s former employer is one of the named defendants in some of the biggest class-action cases filed so far."

Information provided by TalcumPowderCancerLawsuit.com, a website devoted to providing news about talcum powder ovarian cancer lawsuits, as well as medical research and findings.