TRENTON, N.J. (Legal Newsline) - Days after a federal appeals court ended Johnson & Johnson’s first attempt to resolve litigation over talcum powder through the bankruptcy of a specially formed subsidiary, the healthcare-products giant tried again, this time announcing a $8.9 billion tentative settlement agreement with lawyers representing more than 60,000 plaintiffs.
In April 4 filings with U.S. Bankruptcy Court in New Jersey, J&J said it had a plan “to fully, equitably and efficiently resolve all current and future talc-related claims” by establishing a trust similar to those companies have used for decades to settle asbestos-related claims. As part of that plan, the company put its LTL Management unit, which holds talc liabilities, into Chapter 11 bankruptcy for a second time.
While J&J says its agreement with plaintiff lawyers will satisfy present and future claims, it is unclear how that will work in practice. Experts hired by plaintiff lawyers say cosmetic talc contains fibers including asbestos that cause ovarian cancer and mesothelioma, a cancer of the chest lining, both of which can take decades to develop. Since J&J only stopped selling talcum powder in 2020, if the scientific claims of plaintiff experts are true – J&J says they are false -- talc will cause tens of thousands of additional cancer cases over the next 50 years.
That creates a conflict between current claimants and their lawyers, who both have an economic interest in getting their money as soon as possible, and future claimants who haven’t manifested symptoms or hired lawyers yet. Neither J&J nor attorneys at plaintiff firms who negotiated the settlement, including Napoli Shkolnik and Watts Guerra, responded to emails seeking comment. The filing mentions a future claims representative, a typical arrangement in mass-tort bankruptcies, without further details.
Not all plaintiff lawyers have gotten on board. Arnold & Itkin and Beasley Allen issued a news release called the new attempt at bankruptcy a “non-starter.” Any global settlement would require 75% approval by current claimants, they said.
"Johnson & Johnson doesn't have the votes now and will never have the votes," said attorney Leigh O’Dell.
Johnson & Johnson denies its talc products contain asbestos or cause cancer. But in its bankruptcy filing, LTL Management said “due to the long alleged latency periods for mesothelioma and ovarian cancer, cosmetic talc litigation against the debtor is anticipated to continue for decades more, as are the extraordinary costs of defending and resolving the tens of thousands of expected claims.”
While the company said it won six of eight cases that went to verdict in the year before it put LTL into bankruptcy in 2021, juries have awarded billions of dollars in damages, mostly to women who claim talc fibers migrate up through their reproductive tract to cause ovarian cancer. Plaintiff experts also testify that fibers they describe as asbestos can be inhaled in large enough numbers to cause mesothelioma. They don’t explain how the dose from the tiny amounts of asbestos fibers they say are in talc could exceed the billions of asbestos fibers people breath in over their lifetime from environmental exposures.
In its filing, J&J said it faced 40,000 ovarian cancer claims and nearly 500 mesothelioma claims when it put LTL into bankruptcy in 2021. The filing put a temporary stay on new cases, which J&J wishes to maintain with its new Chapter 11 filing. It spent
“Absent the 2021 Chapter 11 case, thousands of additional ovarian cancer and mesothelioma cases would have been filed,” the company said. “Moreover, absent this case, the debtor expects thousands of additional cases would have been filed for decades to come.”
A federal bankruptcy judge approved the LTL filing and appointed mediator Kenneth Feinberg to estimate the value of claims in August 2022. But the Third Circuit Court of Appeals rejected LTL’s bankruptcy in January and ordered it dismissed on March 31, ruling that J&J’s open-ended commitment to paying legal costs meant LTL wasn’t actually insolvent.
In this latest filing, LTL said it fixed that objection by proposing a trust with a present value of $8.9 billion to pay claims, instead of the $2 billion cash injection and financial guarantee J&J proposed before.