On June 28, a federal judge rejected a preliminary order by cancer victims aimed at blocking Johnson & Johnson from moving forward on its proposed $6.48 billion bankruptcy settlement plan. The plan was created to settle tens of thousands of lawsuits alleging the company’s talc products contain asbestos, which led to victims developing ovarian cancer or mesothelioma, a deadly cancer linked to asbestos exposure.
Victims in New Jersey filed the preliminary order as part of a class action lawsuit. Lawyers for talc claimants filed the order to prevent another planned J&J bankruptcy from being filed in Texas or any other jurisdiction outside New Jersey.
The move comes just weeks after Johnson & Johnson’s subsidiary LLT Management submitted a new plan called “Plan of Reorganization” to pay ovarian cancer claimants around $6.48 billion over 25 years to resolve 99.75% of its U.S.-based talc lawsuits. If successful, the order would have prevented J&J from filing for bankruptcy outside the state and put a wrench in its plan to push through the settlement plan.
During Friday’s proceedings, U.S. District Judge Michael Shipp said he could not grant the motion because any harm to the victims was “strictly hypothetical.” He said he had no jurisdiction to resolve a dispute over “events that have not, and may never, occur.”
J&J hopes to receive support from 75% of the claimants out of the more than 61,000 lawsuits as part of the prepackaged bankruptcy plan. The voting deadline on the plan is July 26.
Bankruptcy Plan Projected to Pass
According to a press release by Legal-Bay LLC, the multiple, years-long legal disputes against Johnson & Johnson regarding ties between the use of their talc-based baby powder and ovarian cancer may finally be coming to an end. The bankruptcy filing would enable an expedited plan to be enacted, allowing for a $6.475 billion payout to almost 60,000 plaintiffs.
Under the new settlement plan, victims would receive smaller payouts as retribution for serious medical conditions. Due to the volume of claimants, each settlement value is expected to be between $50k to $150k for each of the nearly 60,000 claims.
J&J continues to maintain its talc is safe, asbestos-free, and does not cause cancer. The company says that its bankruptcy settlement is a fair and equitable solution for claimants who could walk away with nothing at all if their case went to court.
Plaintiffs’ attorneys oppose the plan and say it is a fraudulent attempt to short-change plaintiffs and keep them from getting the retribution they deserve. The settlement is also an attempt by J&J to place billions of dollars of the company’s assets out of plaintiffs’ reach.
J&J’s $700M Finalizes Settlement over Talc Marketing
On June 11, the company finalized a separate $700 million settlement of an investigation by 42 states and Washington, D.C., into the marketing of its talc-based products linked to causing cancer.
Under the settlement, J&J resolved charges that it misled consumers for decades into believing its talc powders were safe. New Jersey will receive just over $30.2 million as part of the resolution, state Attorney General Matthew Platkin said.
Johnson & Johnson Attempts Multiple Bankruptcy Maneuvers
For decades, people have used talcum powder in a variety of consumer products including baby and hygiene body powder. Studies then began to surface linking the popular talcum powder to deadly diseases such as mesothelioma and ovarian cancer. As a result, people filed thousands of lawsuits against the significant talcum powder producer Johnson & Johnson.
Johnson & Johnson has made numerous attempts to disrupt these proceedings and avoid having to pay damages to the victims. Part of those maneuvers were two failed attempts by J&J to execute bankruptcy proceedings aimed at ending current and future talc lawsuits.
The pharmaceutical giant made a strategy, known as a Texas two-step, a term coined in 2023 when it attempted to create a subsidiary that could absorb its talc liability, and then declare bankruptcy. In both bankruptcy cases, two separate courts found that J&J’s subsidiary lacked the “financial distress” necessary to legitimize a bankruptcy filing.
