Judge Rejects Motion To Block Third Johnson & Johnson Talcum Powder Bankruptcy Filing

Although two prior bankruptcy attempts by Johnson & Johnson’s talcum powder subsidiary were dismissed, the Court determined that it cannot pre-emptively block a third filing based on future potential harm to plaintiffs.

The U.S. District Judge presiding over all federal talcum powder lawsuits has rejected a request filed on behalf of plaintiffs, which sought a temporary restraining order to prevent Johnson & Johnson from delaying the litigation again through a third bankruptcy filing, which could severely limit payouts for women seeking compensation for cancer-related injuries.

Johnson & Johnson faces more than 60,000 Baby Powder lawsuits and Shower-to-Shower lawsuits brought by women diagnosed with ovarian cancer and other injuries, each raising similar allegations that the manufacturer failed to warn consumers about the future cancer risks from the talcum powder products.

Rather than attempting to negotiate settlements with those individual women, Johnson & Johnson has made two failed attempts to force the litigation into the U.S. bankruptcy system, by transferring all liability it owes for failing to warn into a new subsidiary, which them promptly filed for bankruptcy. However, federal judges rejected both efforts, noting that the parent company Johnson & Johnson faced no real financial distress from the litigation, and has sufficient assets to settle the claims.

In May, Johnson & Johnson proposed a third bankruptcy attempt, including a $6.5 billion settlement to resolve all current and future Baby Powder lawsuits involving women diagnosed with ovarian cancer, which makes up the bulk of litigation the company currently faces. However, plaintiffs’ lawyers have again roundly rejected the effort, indicating that the amount of the settlement is insufficient to compensate women who relied on the safety of Johnson & Johnson talcum powder products, as well as future claims the company may face.

While each of the two prior attempts to force all talcum powder lawsuits into the U.S. bankruptcy system failed, the controversial move has successfully delayed the litigation for the better part of three years, preventing large numbers of cases from being prepared for individuals trials to determine the amount of compensation the companies should be forced to pay for failing to warn about the talcum powder cancer risks.

Judge Rejects Effort to Prevent Talcum Powder Bankruptcy

After Johnson & Johnson proposed a third bankruptcy settlement earlier this year, a group of plaintiffs filed a class action complaint (PDF) in May, and sought a temporary restraining order to prevent the company’s LLT Management, LLC from filing for Chapter 11 protections, arguing that Johnson & Johnson was abusing the bankruptcy system and improperly denying plaintiffs the opportunity to present their claims at trial.

In a memorandum opinion (PDF) issued on June 28, U.S. District Judge Michael A. Shipp rejected the plaintiffs’ request for a restraining order, indicating that his court lacked jurisdiction to do so. He noted that, to have standing under Article III, plaintiffs have to have been actually injured by the manufacturer’s latest action to file bankruptcy. Judge Shipp noted that has yet to happen.

“In sum, this Court lacks subject matter jurisdiction where: (1) Plaintiffs have yet to suffer an injury-in-fact for purposes of establishing Article III standing and; (2) the controversy between the parties is not ripe for resolution,” he wrote. “In sum, Plaintiffs’ current Complaint is built entirely on a hypothetical. While Plaintiffs’ concerns regarding further delay of this litigation or an alleged fourth fraudulent transfer are understandable, and while the Court recognizes that Defendants may publicly be considering another bankruptcy, it is not the Court’s place to intervene in disputes that may never come to pass.”

July 2024 Talcum Powder Lawsuit Update

The latest bankruptcy attempt comes as plaintiffs’ lawyers and Johnson & Johnson are preparing a group of ovarian cancer lawsuits for potential jury trials, which were initially expected to begin later this year.

However, the Court decided to grant a request by the manufacturer to reconsider prior Daubert rulings, which determine whether expert evidence and testimony is sufficiently reliable to be presented in trial, even though the prior judge presiding over the talcum powder litigation already held such hearings in July 2019. The rehearing of these challenges more than five years later is expected to cause substantial additional delays getting claims before juries.

While the results of these individual bellwether trials will not be directly binding on other claims, the average talcum powder lawsuit payouts awarded by juries are expected to greatly influence the potential settlement values that Johnson & Johnson could be required to pay to avoid the need for each individual case to go to trial in the coming years.