Apr 26, 2023

Talc Claimants Argue J&J’s Second Bankruptcy Filing Not Brought in Good Faith in Motion to Dismiss

Posted by : Irvin Jackson

Johnson & Johnson’s LTL Management subsidiary still cannot show it faces the financial distress necessary for such a bankruptcy filing, talc claimants argue.

In response to a second attempt by Johnson & Johnson’s LTL Management subsidiary to force talcum powder lawsuits through the U.S. bankruptcy system, a group of talc claimants has filed a motion to dismiss the latest filing, indicating it was not done in good faith and is just another scheme to avoid paying women diagnosed with ovarian cancer and other injuries the damages they are entitled to receive.

The pharmaceutical company faces nearly 40,000 Johnson’s Baby Powder lawsuits and Shower-to-Shower lawsuits brought by women nationwide, each alleging asbestos particles in the talc products caused them to develop ovarian cancer, mesothelioma, and other injuries.

Last year, following a series of massive jury verdicts returned in early trials, Johnson & Johnson attempted a controversial bankruptcy scheme by transferring all liability it faced from talc claimants to a newly created subsidiary, LTL Management, LLC, which immediately filed for bankruptcy.

Following a prior motion to dismiss filed by claimants and a number of public interest groups, the U.S. Court of Appeals for the Third Circuit rejected that bankruptcy earlier this year, finding that the LTL subsidiary did not face any real financial distress, since Johnson & Johnson has billions of assets on hand. The decision set the stage for talc claimants to move forward with their cases through the U.S. court system, and a series of trials were expected to begin in the coming months.

Talcum Powder Lawsuits

Talcum powder or talc powder may cause women to develop ovarian cancer.

Rather than negotiating in good faith or defending the safety of their talc products at trial, Johnson & Johnson made the controversial decision to refile the LTL bankruptcy only days later and proposed an $8.9 billion talc settlement, which would require resolution of all current and future claims through the U.S. bankruptcy system.

Talc Claimants File Motion to Dismiss J&J’s Bankruptcy Plan

The latest talc settlement plan immediately came under heavy fire from attorneys representing talc claimants and was rejected by the entire Plaintiffs’ Steering Committee, which represents the interests of all plaintiffs pursuing claims in the federal court system, where the litigation is centralized before U.S. District Judge Michael Shipp in the U.S. District Court for the District of New Jersey.

Leading talc attorneys maintain that the settlement amount proposed is inadequate, and filed a motion to dismiss LTL’s bankruptcy filing (PDF) on April 23. The filing notes that the first bankruptcy attempt was rejected by the Third Circuit, arguing that the filing was not done in good faith, since LTL Management still faces no real financial distress.

In the filing to dismiss this second bankruptcy plan, talc claimants note that LTL Management’s financial position has not changed, and indicate that this latest filing is nothing more than a further attempt to delay the litigation and deprive women of their day in court.

“After weeks of planning this second bankruptcy, after days of depositions, and after hours of examination of LTL’s primary corporate witness, what has LTL actually established? That it has long-term contingent and unliquidated liability which it is unable to calculate and that it has sufficient funds to meet that liability,” the motion states. “Despite every opportunity, LTL failed to present to this Court even the most summary evidence that it cannot meet its liabilities as they come due for the foreseeable future.”

The plaintiffs argue that in the latest filing, LTL feigns financial distress by suggesting it could face financial troubles in a hypothetical future scenario, which the motion claims are an attempt at abusing the bankruptcy system for a second time.

In a statement (PDF) issued on April 24, Erik Haas, Worldwide Vice President of Litigation at Johnson & Johnson, claimed the dismissal motion was an attempt to prevent all talc claimants from voting on the settlement plan. However, plaintiffs’ attorneys say 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. Therefore, the talc claimants argue that the litigation should not be delayed by any attempt to push this inadequate settlement offer.

May 2023 Talcum Powder Lawsuit Update

As part of the second bankruptcy filing, LTL Management called for an extension of a prior stay on all talc powder litigation in the U.S., which was set to be lifted after the appeals court rejected the first bankruptcy attempt.

Last week, U.S. Bankruptcy Judge Michael Kaplan agreed to pause any new trials over talcum powder injury claims for only 60 days, as he expressed skepticism about the latest filing. However, he did allow plaintiffs to file new lawsuits during that time.

Judge Kaplan also made it clear that attorneys representing talcum powder cancer lawsuit plaintiffs with pending trials can keep preparing those cases during the 60-day time period, which may allow trials to resume promptly if this second Johnson & Johnson bankruptcy filing is also rejected.

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 suggested Johnson & Johnson would need to pay more than $10 billion to resolve all lawsuits involving cancer caused by their products. However, that was before the company failed in its initial attempt to resolve the claims through bankruptcy. With the size of the litigation continuing to grow, and the company facing the prospect of more individual talcum powder lawsuit payouts that may be awarded in the coming months, lawyers maintain that the total cost to settle all talcum powder lawsuits now requires substantially more funds than the company is proposing.

Tags: Asbestos, Baby Powder, Bankruptcy, Cancer, Johnson & Johnson, Ovarian Cancer, Shower to Shower, Supreme Court, Talcum Powder

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