A bankruptcy court judge has rejected Johnson & Johnson's (J&J) second attempt to resolve tens of thousands of personal injury lawsuits that accuse the consumer giant of selling asbestos-contaminated talc products that allegedly caused the plaintiffs to develop ovarian cancer or mesothelioma.
The July 31 decision by U.S. Bankruptcy Judge Michael Kaplan in Trenton, NJ blocks J&J’s proposed $8.9 billion settlement, which the company claimed would be the largest settlement in any mass tort bankruptcy case in history and would prevent new lawsuits from being filed.
J&J has settled over 1,000 talc personal injury lawsuits individually and has lost 10 talc cancer trials, including a 2018 decision in a Missouri court that awarded 20 women over $2 billion in damages. To resolve the litigation against it, J&J created a spinoff in 2021, LTL Management, to hold its talc liabilities. LTL Management subsequently filed for Chapter 11 bankruptcy protection, which included a plan to resolve talc litigation for $2 billion via a trust that its parent, J&J, would fund.
The Third Circuit Court of Appeals struck down that first bankruptcy in April with the justification that LTL was not genuinely in financial distress and therefore did not need or deserve the protections of Chapter 11 bankruptcy.
In response to Judge Kaplan’s ruling on the second bankruptcy, J&J suggested that it would appeal the decision. This marks the latest setback for J&J’s attempt to resolve approximately 60,000 cancer claims, most of which center around the company’s discontinued J&J baby powder and Shower-to-Shower talc products. In 2020, the company removed all its talc products from the market and later replaced talc with cornstarch in its baby powder formulation.
In addition to more than quadrupling the global settlement amount, LTL Management justified its re-filing for bankruptcy by claiming that more plaintiffs supported a comprehensive settlement.
The Official Committee of Talc Claimants, which is appointed by the Office of the United States Trustee and acts as a fiduciary for mesothelioma and ovarian cancer victims, expressed satisfaction with the court's decision to dismiss the second bankruptcy attempt and accuses J&J of manipulating the bankruptcy system and wrongfully claiming financial distress to carry out a bad faith bankruptcy case. The Committee believes that the court's ruling allows tens of thousands of victims to seek justice through the tort system, either before juries or through acceptable settlements, ROI-NJ stated.
J&J disagreed with the court's decision, arguing that the bankruptcy court's standard of 'immediate' financial distress was incorrect since that ruling is not found in the Bankruptcy Code.
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