J&J may have to defend baby powder cancer suits after 19-month hiatus

(Bloomberg) – Healthcare giant Johnson & Johnson may be forced to return to court to defend itself after a 19-month hiatus in more than 40,000 lawsuits alleging its baby powder caused cancer.

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A federal judge is overseeing a hearing in New Jersey today to decide whether to reinstate or stay the lawsuits as J&J seeks for a second time to use a bankrupt entity to convince cancer victims to agree to an 8-month settlement to accept $9 billion. Critics say they would rather take their claims in courts across the country to try to win judgments against J&J.

The judge should “allow these cancer victims to have their day in court,” said Joseph Satterley, who represents a 24-year-old man with a deadly form of cancer called mesothelioma. His lawsuit is scheduled to go to court in California on Wednesday, but only if US Bankruptcy Judge Michael Kaplan allows the case.

LTL Management, the J&J entity that filed for Chapter 11, is trying to persuade Kaplan to stop any baby powder lawsuits from proceeding, just as he did after J&J filed the company for the first time in 2021. J&J has long denied any connection between cancer and baby powder, arguing that the best way to settle the lawsuits is through a negotiation plan blessed by a bankruptcy court.

Victims allege that for decades, J&J sold baby powder containing talc contaminated with the toxin asbestos. Although J&J has prevailed in some cases, juries have ruled against the company in nearly a dozen lawsuits over the years. A case went all the way to the US Supreme Court before J&J was forced to pay $2.5 billion to a group of about 20 women whose case went to trial in 2018.

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J&J announced last year that it would stop selling talc-based products, which the company believes are safe.

The $8.9 billion proposal has up to 80,000 plaintiffs supporting it, company attorney Gregory Gordon Kaplan said Tuesday in federal court. The proposal has divided the many law firms that represent tens of thousands of women. Holdouts claim J&J erroneously declared LTL Management back in bankruptcy by order of a federal appeals court just hours after its first attempt was dismissed.

Lawsuits against bankrupt companies like LTL will automatically drop while the company tries to work out a plan to pay creditors, including people who have filed lawsuits. LTL argues that it cannot settle the lawsuits as part of the bankruptcy proceedings while J&J is fighting the tens of thousands of cases across the country.

Ultimately, LTL must send its proposal to the proposers for voting. If 75% of the votes go in favor of the deal, LTL would set up a trust funded with J&J’s $8.9 billion. All current and future claims would then be referred to the Trust, which would use a complex set of rules to decide how much each claimant would receive.

The new bankruptcy filing is LTL Management LLC, 23-12825, US Bankruptcy Court for the District of New Jersey (Trenton).

(Adds comments from attorneys on both sides of the dispute, starting in the third paragraph.)

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