Johnson & Johnson announced its proposal to pay $8.9 billion in an effort to settle a multitude of lawsuits alleging its talc-based baby powder caused their cancer. The company aims to resolve decades of litigation that has tarnished its reputation by utilizing a contentious bankruptcy strategy.
Johnson & Johnson revealed in a statement on Tuesday that the proposed settlement would be distributed over a 25-year period to claimants through a subsidiary, LTL Management. This subsidiary filed for Chapter 11 bankruptcy in New Jersey on the same day, as indicated by court documents. Despite the settlement offer and bankruptcy filing, Johnson & Johnson maintained that its talcum powder products are safe and has consistently refuted claims that its talc-based products, which are used to absorb moisture, cause cancer.
The settlement’s purpose is to “resolve all the current and future talc claims.” However, the U.S. Bankruptcy Court for the District of New Jersey must approve the bankruptcy filing for the settlement to proceed.
This marks the second attempt by Johnson & Johnson to use LTL Management as a means for settling the claims. A federal appeals court rejected the first filing in January, stating that LTL Management was not financially distressed and that shielding the parent company from litigation through a “Texas two-step” maneuver was not a sufficient reason for bankruptcy.
LTL Management’s Chief Legal Officer, John Kim, asserted in a Johnson & Johnson statement that the subsidiary has always aimed to resolve the claims quickly, fairly, and efficiently. He explained that the latest bankruptcy filing addressed the appeals court’s concerns and demonstrated good faith.
More than 60,000 claimants have approved Johnson & Johnson’s settlement offer, but it still requires the approval of others, some of whom disapprove of the agreement and the company’s legal tactics.
One lawyer who is representing some claimants accused Johnson & Johnson of seeking an extreme discount on justice, arguing that the bankruptcy filing would delay resolutions for her clients. She described the settlement as “a non-starter” and the new filing as a disgraceful attempt to stall while clients suffer from cancer.
Although the Food and Drug Administration (FDA) has identified a possible link between the use of talc-based powders in the genital area and ovarian cancer incidence, conclusive evidence has yet to be found. The FDA has acknowledged the risk of asbestos contamination in talc, but Johnson & Johnson insists that its products are asbestos-free.
Nonetheless, a Reuters investigation discovered that the company had been aware of small amounts of asbestos in some of its products for years, while executives failed to report the issue to regulators or the public. In response to the investigation, Johnson & Johnson accused claimants’ attorneys of distorting historical documents for personal financial gain and denied any concealment of talc safety information.
Last year, Johnson & Johnson announced the discontinuation of talc-based baby powder sales globally, following the cessation of sales in the United States and Canada due to declining demand.
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