Court Rejects J&J Bankruptcy Petition To End Talc Cancer Lawsuits
A U.S. appeals court has rejected Johnson & Johnson’s bankruptcy move, saying that it can’t escape from nearly 40,000 lawsuits filed by women who claimed to have developed ovarian cancer after using its asbestos contained talcum powder products.
J&J, which already withdrew its talc-based baby powder, is now required to defend itself against these thousands of ovarian cancer claims. Johnson & Johnson shares lost nearly 4 percent on Monday’s regular trading following the court ruling.
J&J’s move involved creating a unit to take up the liabilities and then file for bankruptcy protection.
Bllomberg reported that a three-judge panel in Philadelphia sided with cancer victims, noting that the drug major incorrectly put its specially created talc subsidiary, LTL Management, under court protection to block juries from hearing the lawsuits.
The case opened back in 2014 when Mississippi sued the company arguing that its talcum powder has carcinogenic substances in the product that leads to ovarian cancer in women.
A Missouri jury in 2018 awarded $4.7 billion fine to the company after 22 women blamed it for using asbestos in their talcum powders and baby products, which has led to their ovarian cancer. A Missouri appeals court in June 2020 reduced the damages award to about $2.12 billion.
Meanwhile, Johnson & Johnson, which currently has about $424 billion market capitalization, in 2021 created a talc shell company known as LTL Management using a Texas law, and transferred its thousands of lawsuits and jury verdicts and filed for bankruptcy.
Later, a New Jersey bankruptcy court upheld its bankruptcy claims to handle the talcum powder cases, noting that LTL Management was right in the chapter 11 filing.
In a statement, Nachawati Law Group, which represents numerous women petitioners who have been diagnosed with ovarian cancer, now noted that the U.S. Court of Appeals for the Third Circuit found that LTL is “highly solvent” and not entitled to file Chapter 11 bankruptcy because J&J had provided it with a $60 billion funding safety net to meet its talc liabilities.
Judge Thomas Ambro, writing for the appellate panel, said that injured claimants’ rights to a jury trial should be “disrupted only when necessary.”
Nachawati noted that J&J can now be held accountable for its failure to warn consumers about known cancer risks associated with talc-based products like Johnson’s Baby Powder.
A successful bankruptcy move would have allowed a profitable corporation to use bankruptcy law to avoid accountability in the civil justice system. However, with thousands of lawsuits set to resume, the law firm projects J&J’s liability to exceed the $60 billion it had set aside for the LTL bankruptcy.
J&J, which continues to claim that the talc was not harmful, reportedly expected earlier that the litigation would cost it around $190 billion.
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