On Friday, July 28, U.S. Bankruptcy Judge Michael Kaplan of the U.S. Bankruptcy Court for the District of New Jersey dismissed the Chapter 11 case filed by Johnson & Johnson’s talc unit, LTL Management LLC, stating that the debtor did not meet the requirements that LTL be in “imminent or immediate financial distress” and was therefore not entitled to legal protection from its creditors. That was J&J’s second attempt to use LTL’s bankruptcy to resolve over 51,000 talc lawsuits alleging that J&J’s talc products caused cancer, the first having been dismissed by the Third Circuit January 30, 2023 on similar grounds. The dismissal has resulted in a steady increase of talc litigation filings against the pharma giant.
In its quarterly call held on October 17, J&J said it is now considering a third bankruptcy filing for LTL in an effort to come to a consensual resolution to the thousands of talc claims pending against it. The company observed that such a move would further its efforts to come to an $8.9 billion settlement and would comply with the recommendation of the same U.S. Bankruptcy Court in New Jersey that had struck down LTL’s second Chapter 11 filing to pursue a consensual resolution to the talc litigation. The latest filing would also include a stay of all litigation while the court considers the third bankruptcy.
In what the company describes as the “second prong” to its strategy, J&J is also planning to appeal the District Court’s second bankruptcy filing dismissal to the U.S. Supreme Court.
J&J maintains that its cosmetic talc products are safe and not carcinogenic, even though the company removed all baby powder from its U.S. and Canadian markets in 2020 citing declining sales.
In a related J&J matter, a New Jersey appeals court threw out a 2020 $223.8 million verdict in favor of four plaintiffs who claimed that J&J’s talc products caused them to develop cancer. In tossing the verdict, the Superior Court of the New Jersey’s Appellate Division determined that the trial judge had wrongly admitted scientific testimony from three experts that supported the plaintiffs’ cases. After the decision, one of the plaintiffs’ counsel indicated he looked forward to the opportunity to present the case to the New Jersey Supreme Court.
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