J&J Disguises Second Bankruptcy as Sham Settlement 

This week, Johnson & Johnson (J&J) announced that it would pay $8.9 billion to tens of thousands of people who claimed that the company’s Baby Powder and other talc-containing products caused them to develop cancer. But there’s a catch. It will also file for a second bankruptcy. 

The company revealed its plan shortly after a second loss before the Third Circuit U.S. Court of Appeals. 

“The talc ‘settlement’ is not a settlement. It’s a second attempt at bankruptcy disguised as a settlement. Nothing but a sham,” says Beasley Allen’s Mass Torts Section Head, Andy Birchfield.

“While $8.9 billion may sound like a lot of money, it’s just another attempt by Johnson & Johnson to misuse the bankruptcy system in order to shortchange cancer victims,” Leigh O’Dell explains. Leigh is one of the firm’s leading talc litigation attorneys and co-chairs the plaintiffs’ steering committee in the multidistrict litigation (MDL) in New Jersey federal court.  

The Latest Proposed Sham Settlement

The proposed settlement would pay nearly 70,000 ovarian cancer and mesothelioma victims or their surviving family members over 25 years through LTL Management, a subsidiary J&J created in a controversial move in 2021. (We talk more about that scheme below). The settlement would also resolve all current and future claims against J&J talc-containing products. 

That translates to less than $120,000 per case—a far cry from the half-million dollars in medical expenses and lost wages an ovarian cancer victim can face. The medical costs incurred by mesothelioma victims are even higher. 

Ted Meadows, another Beasley Allen leading talc litigation attorney, has tried more talcum powder-ovarian cancer cases than anyone in the country. He also co-chairs the coordinated litigation in the New Jersey state court and adds the following perspective.  

“A conservative estimate of the direct treatment costs and lost wages for an individual claimant in this litigation averages nearly $500,000, even without other complications. That should be considered the minimum compensation for victims as we move forward.”

“And that doesn’t even address their pain and suffering or punitive damages,” Andy adds. “These cancer victims and their families suffered tremendously at the hands of J&J’s massive and deliberate cover-up of the dangers of asbestos-laden talc products. It’s time they pay victims what they deserve.”

J&J’s Attempts to Avoid Accountability 

The terms of the sham settlement proposal are considerably worse than the one Beasley Allen lawyers and other firms representing ovarian cancer victims rejected last June. At that time, it appeared that all plaintiffs could be stuck for years as LTL worked through its bankruptcy filing. 

The latest so-called settlement hinges on the court accepting a second bankruptcy filing by LTL Management. As mentioned, J&J created LTL in 2021 in a controversial “Texas Two-step” corporate ruse to shield itself from talc litigation. J&J dumped its talc lawsuits onto LTL and immediately placed the subsidiary into bankruptcy protection. 

In January, the Third Circuit U.S. Court of Appeals tossed out the filing, telling J&J that bankruptcy wasn’t the right way to resolve its mounting talc lawsuits. Last month, the Third Circuit also unanimously rejected J&J’s request to rehear its case by the full court. The court’s March 22, 2023 order reiterates that J&J will not be allowed to avoid liability by abusing the bankruptcy system.

“Since the Third Court tossed out J&J’s first bankruptcy attempt, our negotiating position has significantly improved,” Andy said. 

Continuing the Fight

Last summer, J&J announced it would pull talc-based Baby Powder from the global market this year. Our firm’s and others’ litigation efforts and the brave plaintiffs who have stood up to J&J have played a significant role in getting this dangerous product removed from shelves, protecting more consumers far and wide. 

For J&J’s proposed settlement to move forward, the court must first accept LTL’s second bankruptcy filing. The $400 billion corporate giant will also have to persuade enough claimants to buy into its plan—a plan our firm rejects because it falls short of what our clients and many other talc cancer victims deserve. 

“Rest assured, we are vigorously opposing this deal and will continue fighting to get fair compensation for clients. And, through a remarkable team effort, I am confident that this ploy by J&J to cram down another bad deal will also be declined. We will then be able to negotiate a fair one for clients,” Andy says. “Alternatively, we will get this second bankruptcy thrown out like the first so that we can present clients’ cases before juries again soon.”

Visit our Talcum Powder case page to learn more about our talc litigation efforts.