J&J Attempt to Settle Talcum Powder Lawsuits Through 2nd Bankruptcy Filing Facing Sharp Opposition

Leading plaintiffs’ attorneys indicate that Johnson & Johnson’s latest attempt to settle talcum powder lawsuits through another bankruptcy filing is unworkable, and that women diagnosed with ovarian cancer and other injuries will not support the proposed deal.

Over the last decade, nearly 40,000 women have filed a Johnson’s Baby Powder lawsuit or Shower-to-Shower lawsuit, alleging that asbestos particles in the talc powder caused them to develop ovarian cancer, mesothelioma and other injuries.

Following a series of massive jury verdicts returned in early trials, Johnson &Johnson attempted to pursue a controversial bankruptcy scheme last year, by transferring all liability it faced in the litigation to a newly created subsidiary, LTL Management, LLC, which then immediately filed for bankruptcy. However, the Third Circuit Court of Appeals recently rejected that bankruptcy filing, setting the stage for jury trials to resume in the coming months.

The U.S. Court of Appeals for the Third Circuit initially rejected the bankruptcy filing in January 2023, but more recently denied Johnson & Johnson’s request for a rehearing, and refused to the stay dismissal pending further appeals, after finding that LTL Management faced no real financial distress, since it has access to up to $61.5 billion through its parent company.

Proposed Talcum Powder Lawsuit Settlement Rejected by MDL Lawyers

As the U.S. Courts were preparing to resume efforts to prepare large numbers of claims for trial again, Johnson & Johnson announced earlier this month that it intends to settle all talcum powder lawsuits through an $8.9 billion fund, which would be paid over 25 years, covering all current and future claims.

The company then placed it’s LTL Management subsidiary back in bankruptcy to seek approval for the deal, claiming it had the support of attorneys representing at least 60,000 plaintiffs. However, that assertion has been met with fierce opposition by lawyers who have been litigating against the company for nearly ten years.

At the time of the initial bankruptcy filing, there were just over 37,500 cases filed in the federal court system, raising concerns that most of the attorneys supporting the deal just recently started advertising for cases, and have not vetted claims or confirmed that they can establish their clients’ cancer diagnosis resulted from use of talcum powder.

In a press release issued just after the plan was announced, leading attorneys who have served on a Plaintiffs’ Steering Committee for years, say the plan has been resoundingly rejected and is “unworkable.”

“J&Js arrogance is boundless, and its mockery of the court system demonstrates a callous, bullying mindset. There are no tactics too underhanded for the company to use to try to avoid paying reasonable compensation to these cancer victims,” the statement reads. “The talc ‘settlement’ being touted by J&J and the media is NOT a settlement. It is an illusory proposal for a bankruptcy plan, yet another attempt by J&J to misuse the bankruptcy system. All 14 members of the plaintiffs’ steering committee rejected this proposal.”

Talcum Powder Lawsuit Settlement Problems

Leading attorneys note that the terms of the proposed deal are considerably worse than offers many law firms rejected in June 2022, in the midst of the initial bankruptcy proceedings. Since then, Johnson & Johnson’s attempt to force settlement of talcum powder lawsuits through the bankruptcy system have been rejected at least once, and lawyers indicate the women should be allowed their day in court.

Only a small number of law firms have come forward in support of the deal, and members of the plaintiffs’ steering committee point out that many of those firms do not even represent clients with filed cases in the federal court system.

In addition, the best case scenario seems to indicate plaintiffs would receive about $120,000 each if the settlement were approved. That compares to about $500,000 for the cost of ovarian cancer treatment and lost wages.

Another concern is that requiring LTL Management to conduct the settlement through a bankruptcy filing places an artificial limit on how much compensation will be available for future plaintiffs, who may have not yet developed ovarian cancer or mesothelioma, both of which can lie dormant for years.

No one knows how many more women have yet to be diagnosed with cancer following use of talcum powder use, and limiting the amount available through a bankruptcy action could mean those plaintiffs receive only a fraction of what the original settlement recipients received. This is especially problematic since Johnson & Johnson has billions in assets available to satisfy both current and future claims as they are pursued.

Johnson & Johnson has already spent $1 billion defending the litigation, on top of Baby Powder settlements and verdicts which have amounted to another $3.5 billion, according to the original bankruptcy filing.

Prior estimates had suggested Johnson & Johnson would need to pay more than $10 billion to resolve all lawsuits involving cancer caused by their products. However, after failing in its attempt to force the litigation through the U.S. bankruptcy system, and facing the prospect of individual jury trials nationwide, the company could be responsible for substantially more in individual talcum powder lawsuit payouts awarded at trial if a global settlement is not reached and approved.