On Thursday, July 25th, an appellate court upheld a bankruptcy court’s ruling from last year that denied Johnson & Johnson’s effort to use a subsidiary, LTL Management, to declare bankruptcy to settle cancer claims related to its talc-based baby powder.
In its judgment, the appellate court rejected J&J’s argument that the bankruptcy was necessary due to cash-flow issues. The court further stated that the potential for future insolvency does not justify the drug company’s filing for Chapter 11.
J&J’s latest bankruptcy is one of many attempts to rid itself of its financial obligations to resolve over 50,000 lawsuits claiming that the use of its popular talc baby powder led to claimants developing cancer.
Claimants Voting Deadline
The public awaits the second decision regarding Johnson & Johnson’s new “Plan of Reorganization” which gave claimants until 4 p.m., July 25th to vote. The new plan will settle more than 50,000 lawsuits alleging that the use of J&J’s widely-used talc baby powder led to claimants developing ovarian cancer.
J&J’s subsidiary LLT Management’s blanket settlement would pay ovarian cancer claimants around $6.48 billion over 25 years to resolve 99.75% of its U.S.-based talc lawsuits.
The company solicits plaintiffs to approve the $6.5 billion settlement to cover all current and future ovarian cancer claims, to be filed in an unspecified federal court in Texas. Under the bankruptcy code, the plan would require a 75% supermajority of claimants to be considered for approval by the court.
J & J maintains this is a win-win for claimants in talc lawsuits since most cases would take decades to litigate in court and likely end in no compensation for plaintiffs Ovarian cancer claimants were given over three months to vote for or against J&J’s plan.
Not everyone believes this blanket settlement is in the best interest of claimants or their families.
In late June, a few of the nation’s largest law firms recognized for their successful representation of individuals harmed by dangerous products announced their unified opposition to J&J’s prepackaged bankruptcy plan to address claims brought by ovarian cancer victims.
J&J was denied two previous bankruptcy filings with a market value of more than $350 billion. Both were denied by federal courts in New Jersey where J&J is headquartered.
Law Firms Speak out Against J&J Blanket Settlement
A group of law firms representing claimants in these legal battles say the $6.48 billion settlement is the latest legal maneuver by J&J to avoid owning up to the countless victims injured by the product.
“Despite the hoped-for chilling effect of J&J’s outrageous and boundless bullying tactics – attacking courts, juries, lawyers, the press, and even cancer victims – the number of lawyers willing to courageously stand up to J&J on behalf of cancer victims is inspiring,” says Andy Birchfield of the Beasley Allen Law Firm. “We must make a stand and we must not flinch or back down.”
Attorneys in opposition believe the plan represents a dangerous precedent that could allow other large, financially solvent corporations to evade mass tort litigation.
Cases not covered under this plan include personal injury lawsuits tied to claims that J&J’s cosmetic talc products caused the aggressive cancer known as mesothelioma.
The cancer usually forms around the lungs and is associated with asbestos exposure. In a press release, J&J claims it has already resolved 95% of mesothelioma lawsuits filed and plans to address the remaining claims outside of its new reorganization plan.
