Bloomberg reported Monday that more than 75% of the plaintiffs who filed lawsuits against Johnson & Johnson claiming that the use of asbestos-contaminated talc products resulted in ovarian cancer have voted in favor of a proposed $6.5 billion settlement.
However, the pharmaceutical giant still has a legal hurdle standing in the way of making a third bankruptcy attempt to settle the remaining and future cancer claims against it.
On July 25 – one day before the deadline for the ovarian cancer claimants to cast their secret votes on J&J’s proposed settlement – an appellate court upheld a bankruptcy court’s ruling from last year denying the company’s second effort to use a subsidiary, LTL Management, to declare Chapter 11 bankruptcy.
The appellate court ruled that J&J’s potential for future insolvency from payouts to claimants doesn’t justify using a subsidiary to file for bankruptcy.
J&J plans to appeal the case to the U.S. Supreme Court.
The company has not confirmed that the vote tally for its proposed settlement is finished. J&J earlier set a threshold of more than 75% “yes” votes for filing for bankruptcy for a third time.
Last month a bipartisan group of U.S. lawmakers proposed federal legislation to prevent companies like J&J from using a subsidiary to file for bankruptcy in the Lone Star State, a maneuver called the “Texas two-step,” to shield themselves from asbestos liability.
Asbestos in J&J Talc Products
Asbestos was found in J&J’s talc products, including baby powder after an investigation was launched over claims that some consumers who used those products contracted mesothelioma, ovarian cancer, and other cancers.
In 2020, J&J announced it would stop selling talc-based baby powder in North America and replace it with a cornstarch-based product. However, cancer victims continued to file lawsuits against the company, claiming it knew for decades that some of the talc used in its baby powder contained traces of asbestos.
J&J agreed to pay a $700 million settlement earlier this year to resolve claims from 42 states and the District of Columbia that the company deceived the public about the safety of its talc products by failing to disclose marketing materials about the danger of asbestos. The company did not admit guilt in settling the claims.
