Bankruptcy judge stops talc and cancer cases


In this photo illustration a container of Johnson and Johnson baby powder is displayed on April 05, 2023 in San Anselmo, California.

Justin Sullivan | Getty Images

A federal bankruptcy judge on Thursday ended about 40,000 lawsuits that allege Johnson & JohnsonBaby powder and other talc products have caused cancer.

The decision is part of J&J’s second attempt to settle thousands of talc business in bankruptcy proceedings.

In 2021, J&J spun off its subsidiary, LTL Management, to assume its talc liabilities and file for Chapter 11 bankruptcy protection.

Judge Michael Kaplan at a hearing Thursday in U.S. Bankruptcy Court in Trenton, New Jersey, temporarily stayed the lawsuits that will last until mid-June, The Wall Street Journal reported.

J&J won’t have to stand trial for any more talc allegations during the hiatus, but new lawsuits can still be brought against the company, The Journal reported.

Kaplan told the hearing that J&J had an “uphill battle” ahead of him, according to the newspaper.

The break will give J&J time to reach a permanent settlement with the plaintiffs in the talc cases. The company recently proposed an $8.9 million settlement for current and future talc-related claims and said it plans to submit that plan to bankruptcy court in mid-May.

In a statement, J&J called Kaplan’s decision a “victory for the plaintiffs” because it brings them “one step closer” to being able to vote on the proposed settlement.

The New Brunswick, New Jersey-based company also said it believed the plaintiffs would overwhelmingly support the proposal.

J&J previously said more than 60,000 claimants have already pledged to vote in favor of the plan.

“When presented with a clear and complete explanation and the opportunity to make an informed choice, we strongly believe that plaintiffs will approve of the plan,” said Erik Haas, J&J’s global vice president of litigation.

Kaplan’s decision is narrower than the one he made after LTL Management first filed Chapter 11 in 2021.

The judge ruled in February 2022 that J&J can use the bankruptcy system to resolve the talc allegations, allowing the company to avoid battling thousands of individual lawsuits.

Kaplan essentially confirmed J&J’s use of a strategy known as “Texas in two stages”, which allows companies to separate valuable assets from liabilities through a so-called split merger.

But in January, the United States Court of Appeals for the 3rd Circuit reversed that decision. The appeals court said neither LTL nor J&J had a legitimate need for bankruptcy protection because they were not in “financial distress”.

Amid ongoing legal battles, J&J has continued to deny claims that its talc products have caused cancer.

Chief Financial Officer Joseph Wolk said on an earnings call on Tuesday that it was “unfortunate” that J&J had to “invest dollars in frankly baseless scientific claims.”

The lawsuits allege that J&J’s talc products were contaminated with carcinogenic asbestos, which has caused ovarian cancer in thousands of people.

Some lawsuits link several deaths to J&J’s talc products.

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