Home » US business news » Johnson & Johnson faces second defeat in resolving talc cancer lawsuits

Johnson & Johnson faces second defeat in resolving talc cancer lawsuits

By Nithya Bose in US business news, posted July 31, 2023

A federal judge has rejected Johnson & Johnson’s bid to use a bankruptcy case as a shield against thousands of lawsuits alleging its talcum powder products caused cancer.

The company has been accused of being aware of the risks associated with its talc products, including its widely-used baby powder, for decades.

In 2021, J&J established a subsidiary, LTL Management, to insulate itself from talc litigation.

The proposed strategy involved having the subsidiary, which had filed for bankruptcy, settle all claims against it by paying $8.9 billion.

But, on Friday, July 28, Judge Michael Kaplan of the US Bankruptcy Court for the District of New Jersey ruled against this effort, saying the suits didn’t present an "imminent or immediate financial distress" for the company.

This was consistent with the earlier decision by the US Court of Appeals for the Third Circuit in Philadelphia, which also rejected the first bankruptcy attempt for the same reason.

Judge Kaplan referred to LTL’s financial status: “In sum, this Court smells smoke, but does not see the fire.”

“Therefore, the emphasis on certainty and immediacy of financial distress closes the door of chapter 11 to LTL at this juncture.”

The company plans to appeal Judge Kaplan's decision.

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Erik Haas, J&J’s worldwide vice president of litigation, said: “We respectfully disagree with the bankruptcy court’s conclusion that the ‘substantial liability’ that LTL faces from the massive volume of talc claims asserted against it does not establish ‘immediate’ financial distress under the standard imposed by the Third Circuit, which itself is found nowhere in the bankruptcy code and is contrary to the persuasive authority from other Circuit Courts and directives of the Supreme Court of the United States.”

He added: “As the bankruptcy court urged in its decision, we will continue to work with counsel representing about 60,000 claimants to pursue a resolution of the talc claims.”

Earlier this year, the company stopped global sales of talc-based baby powder and replaced it with a cornstarch-based version.

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