Johnson & Johnson has won a temporary, narrow halt to more than 40,000 claims that the health care giant’s baby powder caused cancer, but more lawsuits could be filed in the meantime.
US Bankruptcy Judge Michael Kaplan said Thursday that the company would not have to go to trial on any talc lawsuits in the coming weeks, but is allowing it to file new ones and continue exploration in existing cases. The limited stay is designed to give J&J’s bankruptcy unit, LTL Management, time to attempt to obtain court approval for an $8.9 billion settlement.
The company was in court in New Jersey on Tuesday to argue whether the lawsuits should resume, or remain on hold, while J&J tries to use the bankrupt unit for a second time to convince cancer victims to accept the settlement. Tries to persuade. Critics say he will take his claims to juries across the country to try to win verdicts against J&K.
Kaplan’s stoppage is less than the stoppage sought by J&J. Lawyers for J&J’s bankruptcy unit tried to persuade Kaplan to block all of the baby powder lawsuits from proceeding, just as he did after J&J first filed for bankruptcy in 2021.
Lawsuits against insolvent companies are automatically halted, while plans to repay creditors — including those who filed the lawsuits — are hashed out. LTL argued that it could not resolve the lawsuits as part of the bankruptcy case, while J&J is fighting thousands of cases across the country.
J&J has long denied any link between cancer and baby powder and has argued that the best way to settle the lawsuits is through a plan blessed by a bankruptcy court.
The victims allege that for decades J&J sold baby powder that contained talc contaminated with the toxic substance asbestos. Although J&J has won some cases, it has lost about a dozen lawsuits over the years. One case that went all the way to the US Supreme Court resulted in J&J being forced to pay $2.5 billion to a group of about 20 women.
Company attorney Gregory Gordon told Kaplan in federal court on Tuesday that the new settlement offer is supported by more than 80,000 claimants. The proposal has divided law firms representing thousands of women who say the company’s baby powder caused cancer. The holdouts have questioned the number of claimants supporting the law firms they say they represent and claim J&J wrongfully put LTL Management back into bankruptcy, its first attempt at a federal appeal. Was dismissed on court orders.
Eventually, LTL must send its proposal to the contenders for votes. Should 75% back the deal, LTL would set up a trust funded with $8.9 billion from J&J. All current and future lawsuits would then be sent to the trust, which would use a complex set of rules to decide how much each claimant would get.
J&J said Tuesday it took a $6.9 billion charge due to the proposed talc settlement, leading to a loss of $68 million in the first quarter of 2023.
The company has said it needs Chapter 11 filing to resolve talc liabilities, which continue to grow. John Kim, LTL’s chief legal officer, testified Tuesday that the number of pending talc claims doubled between the second bankruptcy filing in April and the J&J subsidiary’s first Chapter 11 filing in October 2021.
“The liability of talc is huge,” Kim said.
The new bankruptcy filing is LTL Management LLC, 23-12825, US Bankruptcy Court for the District of New Jersey (Trenton).
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