J&J Talcum Powder Bankruptcy Settlement Offer Gets Enough Backing in Plaintiff Vote

More than 75% of eligible claimants pursuing talcum powder lawsuits against Johnson & Johnson have voted to support a controversial $6.5 billion settlement offer, which may allow the company to resolve the massive and long-standing litigation through the U.S. bankruptcy court.

The results of a secret poll of talc plaintiffs was reported by Bloomberg News on Monday. However, it does not mean the J&J talcum powder bankruptcy settlement is a done deal, as it continues to face fierce opposition and will likely be tied up with legal challenges for some time.

The controversial settlement plan is Johnson & Johnson’s third attempt to force the settlement of talcum powder lawsuits through the U.S. bankruptcy process, by transferring all liability the company faces for failing to warn about the risk of cancer from talcum powder into a recently created subsidiary, which then immediately filed for bankruptcy protections. Two prior bankruptcy attempts each failed, after courts found that there was no real financial distress from the litigation, since J&J has sufficient assets to settle the claims.

Talcum Powder Cancer Lawsuits

For years, Johnson & Johnson has been battling more than 60,000 Baby Powder lawsuits and Shower-to-Shower lawsuits brought by women diagnosed with ovarian cancer and other injuries, each raising similar allegations that the manufacturer failed to warn consumers about the future cancer risks from the talcum powder products.

Following a number of massive verdicts returned in early trials, after juries heard evidence outlining how Johnson & Johnson knew use of the talcum powder for genital hygiene among adult women was causing ovarian cancer and other injuries, the company decided to pursue a “Texas two-step” bankruptcy scheme, rather than attempting to negotiate settlements with women litigating the claims.

Although the prior attempts failed, the move has successfully delayed the litigation for the better part of three years, preventing large numbers of strong cases from being prepared for individuals trials to determine the amount of compensation the companies should be forced to pay for failing to warn about the talcum powder cancer risks.

In May, Johnson & Johnson proposed a third talcum powder bankruptcy settlement, including a $6.5 billion fund to resolve all current and future Baby Powder lawsuits involving women diagnosed with ovarian cancer, which makes up the bulk of litigation the company currently faces.

Many plaintiffs’ lawyers have again roundly rejected the effort, indicating that the amount of the settlement is insufficient to compensate women who relied on the safety of Johnson & Johnson talcum powder products, as well as future claims the company may face, and it is expected that any third filing will face further appeals.

The federal litigation is currently centralized for pretrial proceedings under U.S. District Judge Michael Shipp, in the District of New Jersey for coordinated pretrial proceedings. In June, Judge Shipp rejected a request by plaintiffs to preemptively prevent this third bankruptcy mvoe.

It is expected that Johnson & Johnson will use the results from the secret vote to convince a bankruptcy judge to accept its Chapter 11 bankruptcy proposal for its LTL Management subsidiary. Under federal bankruptcy rules, a company that shows it has three-quarters of plaintiffs support for a settlement can fast-track the bankruptcy process.

Opponents of the J&J talcum powder bankruptcy settlement vote have argued that it is unfair to give all claimants an equal voice about whether to accept the offer, indicating that large numbers of the claims presented are unsupportable in court, and much of the early support came from plaintiffs’ law firms that advertised and acquired large numbers of cases in the past few years, while the litigation has been ongoing for nearly a decade.

Johnson & Johnson is expected to file the proposal in Texas bankruptcy court in the near future.

If approved, the company would pay $6.5 billion over 25 years to resolve current and future talcum powder cancer lawsuits. The company indicates it has already resolved 95% of claims alleging talcum powder exposure led to cases of mesothelioma. The remaining cases are primarily gynecological cancer claims; mainly dealing with cases of ovarian cancer.