Bankruptcy Court Allows New Talcum Powder Lawsuits To Be Filed Against J&J, But No Trials For At Least 60 Days

Judge Michael Kaplan says he is skeptical this new bankruptcy plan, which includes a settlement proposal for all talcum powder lawsuits, will withstand a likely challenge by plaintiffs.

Following a nearly 19 month stay on all litigation proceedings, a federal bankruptcy judge indicates that new talcum powder lawsuits can now be filed against Johnson & Johnson, despite a recent second attempt by one of it’s subsidiaries to pursue bankruptcy protections. However, the court indicates that no trials can begin for at least 60 days, while the judge decides whether to dismiss the latest filing.

Over the last decade, Johnson & Johnson has faced nearly 40,000 Johnson’s Baby Powder lawsuit and Shower-to-Shower lawsuit, each involving similar allegations that asbestos particles in the talc powder caused users to develop ovarian cancer, mesothelioma and other injuries.

Following a series of massive jury verdicts returned in early trials, Johnson &Johnson attempted to pursue a controversial bankruptcy scheme last year, by transferring all liability it faced in the litigation to a newly created subsidiary, LTL Management, LLC, which then immediately filed for bankruptcy. However, the Third Circuit Court of Appeals recently rejected that bankruptcy filing earlier this year, since Johnson & Johnson has sufficient assets to cover the liability faced by it’s newly created subsidiary. This set the stage for jury trials to resume in the coming months.

Despite widespread criticism and a court ruling that determined Johnson & Johnson tried the so-called “Texas Two-Step” bankruptcy scheme solely to avoid high litigation costs it could have easily absorbed, the company initiated a second bankruptcy proceeding for LTL Management earlier this month, after proposing an $8.9 billion talcum powder lawsuit settlement fund that would force all current and future claims through the bankruptcy process.

Temporary Stay on Talcum Powder Lawsuits Granted

As part of the filing, LTL Management called for an extension of the prior stay on the talcum powder litigation, which was set to be lifted after the appeals court rejected the first bankruptcy attempt.

This week, U.S. Bankruptcy Judge Michael Kaplan agreed to pause any new trials over talcum powder injury claims for 60 days. However, he expressed skepticism about the latest filing at a hearing this week, and indicated that plaintiffs can continue to file new lawsuits during that time.

Judge Kaplan also made clear that attorneys representing talcum powder cancer lawsuit plaintiffs with pending trials can keep preparing those cases during the 60-day time period, which may allow trials to resume promptly if this second Johnson & Johnson bankruptcy filing is also rejected.

Talcum Powder Lawsuit Settlement Offer Faces Opposition

As the U.S. Courts were preparing to resume efforts to prepare large numbers of claims for trial again, Johnson & Johnson announced it intends to settle all talcum powder lawsuits through an $8.9 billion fund which would be paid over 25 years, covering all current and future claims.

However, leading plaintiffs’ attorneys in the litigation have roundly rejected the offer, indicating it is two low, again attempts to limit restitution to plaintiffs unnecessarily, and would likely severely limit payouts for future claims, which have not yet been filed because it can take years for ovarian cancer and other ailments linked to talcum powder use to be detected.

The best case scenario seems to indicate plaintiffs would receive about $120,000 each if the settlement were approved. That compares to about $500,000 for the cost of ovarian cancer treatment and lost wages. However, that number could be substantially lower depending on the number of valid claims presented, and delay payments to women diagnosed with cancer.

Johnson & Johnson has already spent $1 billion defending the litigation, on top of Baby Powder settlements and verdicts which have amounted to another $3.5 billion, according to the original bankruptcy filing.

Prior estimates had suggested Johnson & Johnson would need to pay more than $10 billion to resolve all lawsuits involving cancer caused by their products. However, that was before the company failed in its initial attempt to resolve the claims through bankruptcy. With the size of the litigation continuing to grow, and the company facing the prospect of more individual talcum powder lawsuit payouts that may be awarded in the coming months, lawyers maintain that the total cost to settle all talcum powder lawsuits now requires substantially more funds than the company is proposing.