The company proposes the $8.9 billion settlement for cancer-related claims and has decided to end its talc-based products. However, the seeds for legal action, Bloomberg Investigates revealed, were planted years back.
Johnson’s infant powder for a long time been a cult product. However, the product has recently caused a furor about the company. A plethora of lawsuits were brought by Johnson & Johnson alleging the talc-based version was contaminated by asbestos that causes cancer.
Plaintiffs argue that internal documents indicate that the company was aware of the health risks it posed for years. The company claims it was aware that its product, which it is removing this year, had asbestos in it or that causes cancer. The company also points to its numerous legal victories and dismissals of cases.
J&J Failed Strategy?
Johnson & Johnson’s plan to utilize bankruptcy to resolve the multibillion-dollar lawsuit concerning claims that its products containing talc can cause cancer was denied by an appeals court of the Federal Circuit on Monday. The company’s healthcare division said it will appeal the decision.
The ruling of the 3rd Circuit Court of Appeals in Philadelphia lifted from bankruptcy its LTL Management unit, which was settling over 38,000-plus legal charges related to its products, such as Johnson’s Baby Powder.
J&J shares fell 2.7 per cent in trading at midday in midday trading on the New York Stock Exchange.
J&J, which maintains that its talc products are safe, created the company and then spun it off LTL and transferred its talc liability to the company and bankrupted it in 2021.
J&J claimed bankruptcy could be a means to settle thousands of legal cases faster and more effectively instead of bringing each case to trial separately. The company also pledged a financial “backstop” to ensure LTL could pay claimants for talc.
The court of appeals ruled that it could not decide on the LTL Chapter 11 petition because it was created only to gain access to banks for bankruptcy and not because it was financially stressed.
“Applied here, while LTL faces substantial future talc liability, its funding backstop mitigates any financial distress foreseen on its petition date,” was the opinion of 56 pages of three judges.
J&J announced that it would challenge the ruling of the Third Circuit and will continue to pursue an end to the bankruptcy court lawsuits.
“As we have said from the beginning of this process, resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders,” J&J spokeswoman Allison Fennell said. “We continue to stand behind the safety of Johnson’s Baby Powder, which is safe, does not contain asbestos and does not cause cancer.”
Texas two-step Strategy
J&J utilized a restructuring method called “Texas two-step” which was condemned by academics and lawmakers who suggested that the strategy could be a model for other companies looking to stay clear of juries in mass tort suits.
Before the bankruptcy filing, J&J faced costs from $3.5 billion in settlements and verdicts before the bankruptcy filing, among them a case in which 23 women received a settlement worth over $2 billion, according to the bankruptcy court records.
More than 1,500 lawsuits were dismissed without J&J needing to pay anything, and the vast majority of cases that went to trial resulted in mistrials, defence verdicts or judgements against J&J on appeal in LTL’s court documents.
An appeals court asked to reject the bankruptcy petition of plaintiffs suing over products made of talc. They argued that one of the largest health companies should be unable to use bankruptcy to shield it from lawsuits.
The cancer patients sought an appeals court’s permission to overrule a New Jersey bankruptcy judge who had permitted LTL’s bankruptcy to go on. LTL’s bankruptcy filing prevented lawsuits from pursuing against it. US Bankruptcy Judge Michael Kaplan in Trenton, NJ, ruled in February that the bankruptcy of LTL must also prevent any lawsuits involving talc from being filed against the parent J&J. J&J.
Kaplan stated that The bankruptcy court was better able to deal with mass tort litigation than other courts.
If you or your loved ones has a history of using J&J Talcum and they are diagnosed by cancer or any major health condition, We can still help you. Feel free to take your case evaluation – at no cost. Our Lawsuit expert will study your case and help you get compensation, If you qualify.
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[…] initiative had gained more supporters from plaintiffs in a complete settlement of existing and future lawsuits claiming that J&J’s baby powder, as well as other talc products, could contain asbestos and led to […]