Johnson & Johnson said Wednesday it would ask thousands of people suing the company who claimed its talcum powder products caused them cancer to approve a new $6.5 billion settlement that would settle the lawsuits. This is the third attempt to solve the problem.
The company said the settlement would settle nearly all current and future claims that its talcum powder products cause ovarian cancer. Like the last two attempts – in 2021 And 2023 – The new deal will attempt to use an element of the bankruptcy system to settle claims.
Judges have rejected two previous attempts on the grounds that bankruptcy court is not the right venue for them. Johnson & Johnson has said it plans to appeal its most recent bankruptcy rejection to the Supreme Court, but the company did not specify Wednesday why it thought the new effort would survive the same legal challenges as previous efforts. .
Representatives for Johnson & Johnson declined to comment beyond its announcement.
The company is trying to end more than a decade-long legal saga over its liability over one of its most recognizable products, baby powder, which thousands of people claim has affected their ovarian health. Caused cancer and mesothelioma because it is contaminated with asbestos. The company has long denied those claims, but in recent years The sale of talc-based baby powder has been discontinued worldwide.
Last year, Johnson & Johnson proposed an $8.9 billion settlement to resolve 40,000 lawsuits through a subsidiary created in 2021 to absorb liability from its talc powder lawsuits. The plan was to have the unit file for bankruptcy protection – then turn to court to pay the settlement.
Lindsay Simon, a bankruptcy professor at Emory University School of Law, said bankruptcy court is an attractive way to settle large-scale litigation because it allows a company to eliminate cases from claimants who did not agree to its proposal, And also from future contenders.
“The ability of the bankruptcy law to force 25 percent of people to accept a deal that affects their rights – current and future claimants – is strong medicine,” he said. “This is a massive benefit that is not given lightly. Once this happens there is no going back.”
A judge rejected that bankruptcy request in July, ruling that Johnson & Johnson was not actually in any financial trouble, which is a key requirement for filing for bankruptcy. The first attempt to resolve the issue in bankruptcy was blocked by a judge for the same reason.
The latest settlement also hinges on a Chapter 11 restructuring by an entity called LLT Management. The company, formerly known as LTL Management, was recently reestablished in Texas, where Johnson & Johnson is set to file from New Jersey. Texas courts have in the past taken a more lenient stance on the standard for a company to file for bankruptcy.
Under the new proposal, claimants will have three months to vote on the plan. If 75 percent of claimants vote in favor, a “preemptive” Chapter 11 bankruptcy will be filed.
Eric Haas, head of litigation at Johnson & Johnson, said in a statement Wednesday that making the offer to claimants “avoids the conflicting financial incentives of the small minority of plaintiff lawyers who stand to receive excessive legal fees outside of the restructuring.” Are.” ,
Andy Birchfield, an attorney at the Beasley Allen law firm representing the claimants, said in a statement Wednesday that “any bankruptcy filing based on this solicitation and vote would be found to be fraudulent and filed in bad faith under the Bankruptcy Code.”
