Health-care giant Johnson & Johnson may be forced to start defending itself in court again after a 19-month pause imposed on more than 40,000 lawsuits that claim its baby powder caused cancer.
(Bloomberg) — Health-care giant Johnson & Johnson may be forced to start defending itself in court again after a 19-month pause imposed on more than 40,000 lawsuits that claim its baby powder caused cancer.
A federal judge is overseeing a hearing today in New Jersey to decide whether the lawsuits should restart, or remain on hold while J&J tries for the second time to use a bankrupt unit to persuade cancer victims to accept a settlement worth $8.9 billion. Critics say they would rather take their claims to juries around the country to try to win verdicts against J&J.
The judge should “allow these cancer victims to have their day in court,” said Joseph Satterley, who represents a 24-year-old man with a fatal form of cancer called mesothelioma. His lawsuit is scheduled to go to trial Wednesday in California, but only if US Bankruptcy Judge Michael Kaplan allows the case to proceed.
LTL Management, the J&J unit that filed for Chapter 11, is trying to convince Kaplan to block all the baby powder lawsuits from going forward, just as he did after J&J first put the company into bankruptcy in 2021. J&J has long denied any link between cancer and baby powder and argues that the best way to settle the lawsuits is through a negotiated plan blessed by a bankruptcy court.
Victims allege that for decades J&J sold baby powder that contained talc contaminated with the toxic substance asbestos. Although J&J has prevailed in some cases, juries ruled against the company in nearly a dozen suits over the years. One case was appealed all the way to the US Supreme Court before J&J was forced to pay $2.5 billion to a group of about 20 women whose case went to trial in 2018.
J&J announced last year that it will stop selling talc-based products, which the company has maintained are safe.
The $8.9 billion proposal is backed by as many as 80,000 claimants, company lawyer Gregory Gordon told Kaplan in federal court on Tuesday. The proposal has split the many law firms representing tens of thousands of women. Holdouts claim J&J wrongly put LTL Management back into bankruptcy just hours after its first effort was dismissed on orders from a federal appeals court.
Lawsuits against bankrupt companies like LTL are automatically halted while the company tries to work out a plan to pay creditors, including people who have filed lawsuits. LTL argues that it cannot resolve the lawsuits as part of the bankruptcy case while J&J is fighting the tens of thousands of case around the country.
Eventually, LTL will need to send its proposal to claimants for a vote. Should 75% of those voting back the deal, LTL would set up a trust funded with the $8.9 billion from J&J. All current and future lawsuits would then be channeled to the trust, which would use a complex set of rules to decide how much each claimant would get.
The new bankruptcy filing is LTL Management LLC, 23-12825, U.S. Bankruptcy Court for the District of New Jersey (Trenton).
(Adds comments from lawyers on both sides of the dispute starting in the third paragraph.)
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