Johnson & Johnson’s bankruptcy plan to resolve multibillion-dollar claims over its cancer-causing talc products is DISMISSED by federal appeals court
- J&J faced costs of $3.5 billion in verdicts and settlements over claims
- The pharmaceutical company was filing a case to handle more than 38,000 lawsuits
- Now Johnson & Johnson’s plea has been ignored by a federal appeals court
Johnson & Johnson’s bankruptcy plan to resolve the company’s multi-billion dollar claims that its talc products cause cancer has been thrown out by a federal appeals court.
The decision of the United States Court of Appeals for the 3rd Circuit in Philadelphia on Monday denied a Chapter 11 petition filed by a newly formed subsidiary of J&J in October.
The drug company filed a lawsuit to address more than 38,000 lawsuits filed by plaintiffs alleging baby powder and other company products caused cancer.
Prior to bankruptcy, J&J faced costs of $3.5 billion in verdicts and settlements, including one in which 22 women ultimately won a judgment for more than $2 billion, according to bankruptcy court records.
The drug company filed a lawsuit to address more than 38,000 lawsuits filed by plaintiffs alleging baby powder and other company products caused cancer.
Several large corporations, including J&J and 3M Co, have turned to bankruptcy court to manage their mass tort liabilities.
Plaintiffs’ attorneys have called the cases an improper manipulation of the bankruptcy system, while the companies say Chapter 11 filings aim to compensate plaintiffs fairly and equitably.
J&J’s maneuver is known as a two-step Texas lawsuit for a state law used to create a subsidiary that takes on litigation and then declares bankruptcy.
In 2018, a 2018 Reuters investigation found the New Jersey-based company had known for decades that traces of the deadly carcinogen had been found in its baby powder.
Internal records, trial testimony and other evidence showed that from 1971 through the early 2000s, the company’s raw talc and finished powders contained asbestos.
In 2019, the Food and Drug Administration (FDA) recalled the powder after finding asbestos in nine of 43 bottles tested.
She then stopped selling the talcum powder during the summer.
Joaquin Duato, CEO of Johnson & Johnson
The opinion of the Third Circuit allows the talc litigation against the company to be resumed. J&J said it would challenge the ruling and that its talc products are safe.
Its shares fell more than 3% – the biggest one-day percentage drop in two years.
The New Jersey-based company, valued at more than $400 billion, said its subsidiary’s bankruptcy was initiated in good faith and designed to resolve talc claims fairly for the benefit of all plaintiffs.
J&J initially pledged $2 billion to the subsidiary to resolve the talc claims and reached an agreement to fund a possible settlement approved by a bankruptcy judge.
The company said in a statement it would appeal the decision, rejecting the third court’s assertion that the company failed to file the case in good faith.
He said: ‘As we have said from the start of this process, resolving this issue as quickly and efficiently as possible is in the interests of claimants and all stakeholders.
“We continue to advocate for the safety of Johnson’s Baby Powder, which is safe, contains no asbestos and does not cause cancer.”
A three-judge appeals court panel rejected J&J’s argument, concluding that the company’s subsidiary, LTL Management, was created solely to gain access to the bankruptcy system and not because it was facing financial hardships. financial difficulties.
“Good intentions – such as protecting the J&J brand or fully resolving disputes – are not enough on their own,” the judges said in a 56-page opinion.
The ruling casts doubt on J&J’s long-planned strategy to settle the talc lawsuit after it lost an attempt to overturn a landmark verdict that ultimately awarded more than $2 billion to 22 women who blamed their cancer from ovary to baby powder and other talc products.
More than 1,500 talc lawsuits have been dismissed without J&J having to pay anything, and the majority of cases that have gone to trial have resulted in defense verdicts, mistrials, or judgments for the company on appeal, according to court documents from the J&J subsidiary.
How J&J paid 22 women $4.7 billion after jury found product contained asbestos causing them to develop ovarian cancer – seven of the women died
The most significant case brought against Johnson & Johnson since evidence first linked the company’s baby powder to cancer diagnoses, a jury in St Louis, Missouri, decided in 2018 to award to 22 women a total of $4.69 billion.
He concluded that J&J’s talc products contained asbestos, which caused the women, six of whom died before getting justice, to develop ovarian cancer.
CEO Alex Gorsky said he hoped the decision would be overturned on appeal, but it was upheld in December 2018, encouraging thousands more to come forward.
Krystal Kim, 56 (left), is one of 22 women who brought the J&J case back to Missouri. Right: Toni Roberts died of cancer just months after the $4.7 billion payout
Toni Roberts, who died just months after the ruling, told Reuters at the time: “Justice has been served.”
‘We have made a difference. We alerted the public.
Another of the women, Krystal Kim, said she used J&J baby powder several times a day from the age of ten until her early 50s.
She put the powder on sheets, carpets, hair, face and body and even on her dog.
“They call it baby powder to make it sound harmless,” Krystal said.
During the trial, company attorney Peter Bicks testified that J&J had sympathy for the women, but that J&J was not responsible for their illnesses.
“Just because something terrible happened doesn’t mean Johnson & Johnson had anything to do with it,” Bicks said.
