USA: Appeals court dismisses bankruptcy petition by Johnson & Johnson subsidiary, enabling litigation over allegedly harmful talc products to proceed
"U.S. court rejects J&J bankruptcy strategy for tens of thousands of talc lawsuits", 30 Jan 2023
A U.S. appeals court upended Johnson & Johnson’s attempt to offload into bankruptcy tens of thousands of lawsuits over its talc products, ruling the healthcare conglomerate improperly placed a subsidiary into Chapter 11 proceedings even though it did not face financial distress.
The decision by the U.S. 3rd Circuit Court of Appeals in Philadelphia on Monday dismissed a Chapter 11 petition filed by a recently created J&J subsidiary in October to address more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talc products caused cancer.
Before the bankruptcy, J&J faced costs from $3.5 billion in verdicts and settlements...
The Third Circuit’s opinion allows talc litigation to resume against the company.
J&J said it would challenge the ruling and that its talc products are safe...
The New Jersey-based company, valued at more than $400 billion, said its subsidiary’s bankruptcy was initiated in good faith and designed to equitably resolve talc claims for the benefit of all plaintiffs...
A three-judge panel on the appeals court rejected J&J’s argument, finding the company’s subsidiary, LTL Management, was created solely to access the bankruptcy system and not because it faced financial distress...
More than 1,500 talc lawsuits have been dismissed without J&J having to pay anything, and the majority of cases that have gone to trial have resulted in defense verdicts, mistrials or judgments for the company on appeal...
A December 2018 Reuters investigation revealed that the company knew for decades of tests showing its talc sometimes contained traces of carcinogenic asbestos but kept that information from regulators and the public.
Plaintiffs and other legal experts urged U.S. Bankruptcy Judge Michael Kaplan last year to dismiss the J&J subsidiary’s bankruptcy, arguing it was filed in bad faith and risked becoming a blueprint for large corporations seeking to avoid undesirable litigation...