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Court Approves J&J Bankruptcy Plan to Limit Talc Lawsuit Liability

Riddle Brantley LLP   |  March 17, 2022   |  

Bankruptcy Decision May Limit Johnson & Johnson’s Liability in Talcum Powder Lawsuits

Johnson & Johnson, one of the most popular talcum-based baby powder products manufacturers, has been approved for the Chapter 11 bankruptcy filing for its subunit LTL Management.

Judge Michael B. Kaplan has approved the bankruptcy filing and rejected claims from plaintiffs who believe Johnson & Johnson is using the LTL Management bankruptcy filing to avoid liability for the over 30,000 talcum powder lawsuits alleging that J&J talc-based baby powders cause cancer.

Johnson & Johnson transferred all outstanding talcum powder liabilities to LTL Management company before filing for bankruptcy on behalf of the subunit company, a move known in legal circles as “the Texas Two-Step” that can help companies avoid liability in litigation.

While plaintiffs claim that this move will shut down current and future talc claims, Judge Kaplan states in his 56-page opinion that he believes the bankruptcy court will be “the optimal venue for redressing the harms of both present and future talc claimants in this case — ensuring a meaningful, timely, and equitable recovery.”

What Does the Bankruptcy Ruling Mean for Talcum Powder Lawsuit Plaintiffs?

How Will Bankruptcy Affect Johnson & Johnson Talcum Powder LawsuitsClaimants are disappointed by the bankruptcy ruling, as it is intended to shield the parent company from accepting liability for these claims. It may also be used to pressure claimants into taking lower settlements. However, the bankruptcy ruling does not mean that plaintiffs in talcum powder litigation will necessarily be denied compensation. Plaintiffs and their attorneys have also vowed to appeal the decision.

A $61 Billion Fund for Potential Settlements?

Judge Kaplan has ruled that the $61 billion currently housed in LTL Management be used to fund a trust for potential talcum powder settlements with all current and future claimants. In his opinion, Judge Kaplan continues to defend bankruptcy proceedings as a valid and more expedited way for large litigation cases to proceed against massive companies like Johnson & Johnson.

Lastly, Judge Kaplan also approved a separate motion by J&J and LTL Management to stay all legal action against the companies while the bankruptcy proceedings commence.

Plaintiffs Vow to Appeal

While this provides a further blow to the thousands with claims against the company, many claimants have stated that they intend to continue exploring avenues of appeal on this decision so they can instead bring their claims directly against Johnson & Johnson. Their representatives have also made it clear that they do not believe the $61 billion trust will be enough to address the over 30,000 current claims against the company and future claims to come.

An Unexpected Decision

The decision to allow this bankruptcy filing was largely unexpected. Legal experts see it as a “stamp of approval” on the “Texas Two-Step” maneuver, which may set a precedent for other companies looking to avoid liabilities in large litigation cases.

Why is Johnson & Johnson Facing Allegations?

Claimants in the baby powder lawsuit cases against Johnson & Johnson (J&J) allege that their popular talc-based baby powder contains dangerous levels of asbestos.

Asbestos is a known human carcinogen, meaning it can cause cancer. When talc is improperly mined, it can become contaminated with asbestos.

Leaked internal documents from Johnson & Johnson suggest that the company was aware that their talc-based products were contaminated with asbestos for years. Still, little was done to correct the issues. Once the documents were released, thousands of claims were brought against J&J seeking to hold them accountable for not informing the public about the risks associated with their products and failing to correct the asbestos contamination.

Do You Have a Talcum Powder Cancer Claim?

If you or a loved one has been diagnosed with ovarian cancer, endometrial ovarian cancer, or mesothelioma after exposure to Johnson & Johnson talc-based baby powder or other products, please call 1-800-525-7111 for a free, no-obligation consultation with an experienced trial attorney at Riddle & Brantley.

There are no upfront costs and you won’t pay any attorney fees unless we win your baby powder cancer case and you receive compensation. Please call 1-800-525-7111 today and let’s review your claim.

Justice Counts.