Plaintiff's attorneys have filed a motion to dismiss the bankruptcy case of Johnson & Johnson’s subsidiary company, LTL management. The committee for plaintiffs state in their motion that this bankruptcy is a bad faith effort designed to dodge billions of dollars in talcum powder litigation costs. 

After being transferred to New Jersey in November, J&J’s bankruptcy case may now meet fiercer resistance, according to Law360. According to experts, the transfer out of the Fourth Circuit Court of Appeals and into the Third Circuit Court of Appeals may make things easier for plaintiffs.

The Fourth Circuit Court of Appeals held jurisdiction over LTL Management’s bankruptcy until a successful motion by plaintiffs transferred the case to New Jersey and into the jurisdiction of the Third Circuit Court. 

According to Law360, in the Third Circuit Court, “such a challenge has a higher likelihood of success because the standard for a bad faith dismissal is an easier bar to meet.”

The LTL Management bankruptcy case was transferred to New Jersey because, according to U.S. Bankruptcy Judge J. Craig Whitley, “Except for two days of the debtor's existence, the predecessor was there, the parent is there, the employees are there, the physical location is there, the multidistrict litigation and the bulk of the claims, while not from New Jersey exclusively, are certainly there as well.” 

In their latest motion entered into the court in the beginning of December, plaintiffs argued that J&J “created this Debtor on the eve of its bankruptcy filing and initiated and prosecutes this Chapter 11 case for one purpose and one purpose alone—to manage the litigation associated with J&J’s decades-long manufacture and sale of a carcinogenic product.” 

The plaintiffs also accuse J&J of blatantly admitting that they knew what they were doing saying, “J&J even went so far as to aptly identify this Debtor as a litigation management vehicle, naming it ‘LTL Management’, an acronym for ‘Legacy Talc Litigation’ management.”

While the bankruptcy transfer to New Jersey may give plaintiffs a stronger hand in arguing that J&J acted in bad faith, the case is in no way guaranteed to succeed.