Talcum Powder Lawsuit Liabilities Force Avon to File for Bankruptcy

“Legacy talc liabilities” have led to Avon deciding to seek Chapter 11 bankruptcy for all of its U.S. holdings.

After being hit with a $24.4 million talcum powder mesothelioma lawsuit verdict just days ago, Avon has declared bankruptcy, fearing the pricy jury decision could just be the tip of the iceberg for legal liability the company may face from health risks associated with talcum powder.

Avon Products, Inc. has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, according to a press release issued on August 12, which specifically citing the financial threat of talcum powder lawsuits as the reason for the filing.

The company notes that Avon has not sold products in the U.S. since it sold off its North American business in 2016, but still holds onto the brand in countries outside of the U.S. The non-U.S. holdings are not part of the Chapter 11 bankruptcy filing.

Avon indicates that “legacy talc liabilities” drove the bankruptcy decision, after the company was hit by a $24.4 million jury verdict in a talcum powder lawsuit brought by Cipriano Ramirez, who was diagnosed with pleural mesothelioma in 2023, following exposure to asbestos in Avon talcum powder while working at a manufacturing facility near Chicago in the early 1980s.

Asbestos exposure is known to be the primary cause of mesothelioma, which is a rare form of cancer that attacks the lining of the chest and lungs, and can go undetected for decades. As a result it is often at a very advanced stage by the time it is diagnosed, resulting in a limited life expectancy.

Most of the litigation over asbestos in talcum powder products has been aimed at Johnson & Johnson, which also faces tens of thousands of lawsuits alleging that Johnson’s Baby Powder and Shower-to-Shower talc powder were sold for years with asbestos contamination, causing former users to develop mesothelioma, ovarian cancer and other ailments.

Although Johnson & Johnson routinely denied that there was any asbestos in it’s talcum powder, the company issued a Baby Powder recall in 2019, after confirmed the presence of the toxic fibers in the widely-used cosmetic powder. The company has since phased out the use of talc powders, instead marketing products containing cornstarch.

Avon notes that Natura & Co., which bought Avon in 2020, will now buy Avon’s non-U.S. operations for $125 million, and will provide up to $43 million in financing to fund the company during the bankruptcy and sell off of Avon’s assets. Natura removed all talc from Avon products sold in the U.S.

The Avon brand name in the U.S. is currently owned by LG Household & Health Care Ltd., which is not part of the bankruptcy proceedings.

August 2024 Johnsons Baby Powder Lawsuit Update

Avon is not the only, or first, company to seek bankruptcy protection due to talcum powder liability over the potential cancer risks.

Johnson & Johnson currently faces an estimated 100,000 Baby Powder lawsuits and Shower-to-Shower lawsuits that are working through the U.S. court system, and several cases have also gone to trial against the company that have resulted in billions of dollars in damages being awarded to former consumers. While many of the claims involve former users diagnosed with mesothelioma, most involve the development of ovarian cancer.

Given common questions of fact and law raised in complaints filed throughout the federal court system, all talcum powder cancer lawsuits against Johnson & Johnson specifically have been centralized in the U.S. District Court for the District of New Jersey since 2016. However, just before the first federal ovarian cancer jury trials were set to begin, Johnson & Johnson derailed the litigation by pursuing a controversial bankruptcy maneuver.

Rather than attempting to negotiate settlements to potentially resolve claims, 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 about the link between talc and cancer 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.

While the company reports the latest talcum powder settlement offer has 75% support from claimants, many plaintiffs’ lawyers have 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.