A United States Bankruptcy Judge from the Southern District of Texas has denied Johnson & Johnson’s $10 billion baby powder settlement proposal. This is the third time J&J has tried a bankruptcy strategy and failed. If approved, more than 60,000 ovarian cancer lawsuits would have been ended. The company estimated that each plaintiff with ovarian cancer would have received between $75,000 and $150,000 through the plan. The plan would have ended any future lawsuits but would not have affected any remaining mesothelioma lawsuits. J&J claims to have settled 95 percent of the mesothelioma lawsuits that have been filed. Plaintiffs with mesothelioma have pursued their legal claims through the traditional court systems to seek compensation. The failure of J&J’s settlement proposal means plaintiffs can pursue their cases in court.
According to the judge’s ruling, the settlement was rejected for several reasons. The reasons include unfair legal protections, voting issues, and concerns about justice for all claimants. The case was distilled to fundamental bankruptcy principles. Claimant votes were determined to be unreliable because some law firms cast tens of thousands of votes without permission from clients. Many claimants also did not have time or information to vote properly. Some votes were even switched at the last minute, violating the voting rules. In the ruling, the judge also noted that the settlement plan attempted to shield J&J, retailers, and others from future talc lawsuits, even from people who did not consent. This type of forced legal protection, known as nonconsensual third-party releases, is not permitted under current bankruptcy law. With all the factors in consideration, the judge ruled that the case should be dismissed.
Johnson & Johnson is planning on fighting the outstanding ovarian cancer talc lawsuits in court. Instead of pursuing a protracted appeal, the company plans on returning to the tort system to litigate the remaining cases. The vice president for litigation plans on increasing efforts to defeat remaining claims. The company does not think talc-related claims against it have merit. People in the company believe that plaintiffs’ lawyers are creating fake claims to make money.
The company believes that the claims that J&J products caused their cancer are fake and based on bad science. It continues to maintain that its products are safe and asbestos free. Approximately $1 billion has been spent on legal defenses of talc claims. Court documents show that the company knew that talc contained asbestos as early as the 1950s. Lab tests show asbestos was in J&J talc from 1971 through the early 2000s, but this was never reported to the Food and Drug Administration. In 2020, Johnson & Johnson stopped making talc-based baby powder and switched to cornstarch after public concerns over safety increased. Talc and asbestos form near each other, making it difficult to keep talc separate from asbestos. Asbestos is the main cause of mesothelioma and other asbestos related diseases.
