Bankruptcy Stay on Talcum Powder Lawsuits Lifted, As Wave of New Complaints Begin to Be Filed

A federal bankruptcy judge has officially lifted the stay on talcum powder lawsuits being pursued against Johnson & Johnson and its LTL Management subsidiary, following a lengthy delay in all litigation over the past two years, after the manufacturer twice failed to force settlement of the claims through the U.S. bankruptcy system.

Prior to initiating the controversial talcum powder bankruptcy scheme in late 2021, Johnson & Johnson faced more than 37,000 Baby powder lawsuits and Shower-to-Shower lawsuits filed throughout the federal court system, each involving similar allegations that asbestos particles in the talc-based products caused users to develop ovarian cancer, mesothelioma, and other injuries.

Now that the bankruptcy stay on talcum powder lawsuits has been lifted, it is expected that the total number of claims will rise sharply, since prior filings in the bankruptcy proceedings suggested that there are over 60,000 claims being presented, when including unfiled cases.

Plaintiffs have been barred from filing new talcum powder claims after Johnson & Johnson transferred all liability it faced in the litigation to a new subsidiary, LTL Management, LLC, which then immediately filed for bankruptcy protection. However, the Third Circuit Court of Appeals rejected that initial bankruptcy filing in March 2023, finding that Johnson & Johnson has sufficient assets to cover the liability faced by the newly created unit, determining that LTL Management faced no real financial distress.

Just as the litigation was set to get underway once again earlier this year, Johnson & Johnson immediately initiated a second bankruptcy filing, as part of a proposed $8.9 billion talcum powder settlement fund that it hoped to use to force all current and future plaintiffs to resolve their claims through the U.S. bankruptcy system.

Last month, U.S. Bankruptcy Judge Michael B. Kaplan rejected the second talcum powder bankruptcy, after determining that it was “filed in bad faith” and that LTL Management still did not face financial distress requiring bankruptcy protections.

Bankruptcy Judge Lifts Stay, Allowing New Talcum Powder Lawsuits

On August 11, Judge Kaplan issued a court order (PDF) officially dismissing LTL Management’s second bankruptcy petition, and lifting the stay which has held up the litigation for nearly two years.

“To the extent not already terminated by an order of this Court, the automatic stay with respect to LTL is terminated immediately upon the Dismissal Date,” Judge Kaplan wrote.

The order now allows new talcum powder lawsuits to be filed against Johnson & Johnson and LTL Management, and at least 21 complaints were filed on Monday of this week alone.

After Judge Kaplan rejected the latest bankruptcy filing, plaintiffs had asked the court to prevent Johnson & Johnson and LTL Management from being able to file for bankruptcy again for 180 days. However, that specific provision of the proposed order was struck out by Judge Kaplan, leaving open the door that the manufacturer could file for bankruptcy a third time, further delaying the litigation.

Plaintiffs Push For Quick Movement in Talcum Powder Lawsuits

Prior to the initial talcum powder lawsuit bankruptcy stay, the parties were planning for a series of early bellwether trials to be held, to help gauge how juries are likely to respond to certain evidence and testimony that is likely to be repeated throughout the litigation. To make up for lost time, plaintiffs are now pushing the court to quickly resume trial prep.

In an August 11 letter (PDF) sent to U.S. District Judge Michael A. Shipp, who is presiding over coordinated pretrial proceedings in all federal talcum powder lawsuits, members of a Plaintiffs’ Steering Committee called for the Court to begin moving the cases toward trial “expeditiously.”

“Johnson & Johnson, by filing not one but two bad faith bankruptcies, has needlessly delayed the trial of cases in federal and state courts. The delay has prevented thousands of women with ovarian cancer from having their day in court,” the letter notes. “Since the inception of this MDL, more than 2,700 plaintiffs represented by members of the PSC have died, and of those, in excess of 600 died during the pendency of the two LTL bankruptcies. Sadly, the number of deaths that have occurred in the overall MDL litigation are multiples of these numbers.”

In response, Judge Shipp issued a docket order this week, scheduling a status conference for September 6. The parties were directed to submit a proposed scheduling order by August 23.