Johnson & Johnson (J&J) has proposed an $8.9 billion settlement to resolve tens of thousands of lawsuits that allege its talcum powder was contaminated with asbestos and caused plaintiffs to develop cancer.
The April 4 announcement follows a refusal by a U.S. bankruptcy court and a federal appeals court to stay litigation against the medical device, pharmaceutical and consumer-goods multinational corporation, which attempted to escape paying liabilities over the lawsuits by forming a subunit—LTL Management—and shortly thereafter having the subunit file for Chapter 11 protection under the U.S. bankruptcy code, a controversial legal maneuver called the “Texas Two-Step.”
Plaintiffs and claimants allege that using J&J’s iconic talc baby powder and/or the company’s Shower-to-Shower talc powder caused them to develop either ovarian cancer or mesothelioma.
J&J’s offer is over four times the $2 billion amount it offered to settle the lawsuits when LTL originally filed for bankruptcy in October 2021.
According to a statement issued by J&J, the nearly $9 billion settlement would be paid out over 25 years and paid by LTL Management, which re-filed for Chapter 11 bankruptcy protection the same day as the settlement was announced in order to resolve all talc litigation in North America. J&J also stated that 60,000 claimants have agreed to the settlement proposal. Not all plaintiffs’ attorneys have agreed to the settlement, calling J&J’s latest settlement offer inadequate.
Under the proposal, plaintiffs who have agreed to the settlement and who have been diagnosed with cancer before April 1 would be paid from the bankruptcy trust within one year of the date that a judge approves the plan, Reuters reported.
J&J maintains that the re-filing is not “An admission of wrongdoing, nor an indication that the Company has changed its longstanding position that its talcum powder products are safe.”
This latest bankruptcy filing by J&J’s subunit includes a reorganization plan that includes the settlement offer. J&J announced that the re-filing would be presented to a judge by May 14.
LTL Management was removed from bankruptcy protection by The Third Circuit Court of Appeals in January, ruling that because of the holdings of the parent company (J&J), LTL Management was not in financial distress. In late March, the same court rejected J&J’s petition for a rehearing of the bankruptcy, a ruling that resumed approximately 38,000 talc cancer lawsuits.
J&J responded by saying it would petition the U.S. Supreme Court to review the bankruptcy petition. Legal experts believe it’s highly unlikely the nation’s highest court will grant the review.