Third J&J Bankruptcy Filed in Another Attempt To Resolve Talcum Powder Cancer Lawsuits

In a bid to settle tens of thousands of talcum powder ovarian cancer lawsuits through a controversial bankruptcy maneuver, Johnson & Johnson has transferred all liability it faces in the litigation to another new subsidiary, which has now filed for Chapter 11 protections, which will likely delay trial dates expected to begin in the coming months.

On September 20, Johnson & Johnson issued a press release announcing that its subsidiary Red River Talc LLC has filed for bankruptcy, after it was assigned legal responsibility for about 62,000 Baby Powder lawsuits and Shower-to-Shower lawsuits currently being pursued by women nationwide, who say they developed ovarian cancer after years of using the company’s talc-based products on their genitals.

This will be the company’s third attempt at trying to resolve the litigation through a bankruptcy procedure known as the Texas Two-Step, where a company creates a subsidiary for the sole purpose of going bankrupt, in order to limit access to the parent company’s funding. Many have criticized the maneuver as an abuse of the U.S. bankruptcy system, indicating that it allows profitable companies to force artificial caps on their liability for widespread damages they caused.

The previous two attempts to shift the talcum powder litigation into bankruptcy proceedings involved another Johnson & Johnson subsidiary known as LTL Management. However, the attempts were rejected by federal judges who said there was no real financial need for bankruptcy protections.

Rather than negotiating in good faith with plaintiffs, Johnson & Johnson proposed a third talcum powder bankruptcy settlement in May 2024, which included a $6.5 billion fund 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.

Since the May announcement, the company has now increased the proposed settlement fund amount to $8 billion, according to the Red River Talc LLC Chapter 11 bankruptcy filing (PDF) submitted in the U.S. Bankruptcy Court for the Southern District of Texas on September 19, 2024.

The bankruptcy court typically requires a 75% approval threshold to confirm settlement plans like the one proposed by Johnson & Johnson, and the company claims that about 83% of claimants support the proposed offer. However, the filing is still likely to face substantial legal challenges.

Delays Expected in Federal Talcum Powder Lawsuits

Given common questions of fact and law raised in the complaints, talcum powder cancer lawsuits filed in federal court have been centralized in the U.S. District Court for the District of New Jersey since 2016.  The litigation was previously assigned to U.S. District Judge Freeda Wolfson, but was ultimately reassigned to U.S. District Judge Matthew Shipp after her retirement a few years ago.

While a number of state court talcum powder lawsuits have resulted in massive verdicts, no federal trials have yet been held. Judge Shipp has scheduled the first federal bellwether trial to begin in December 2024, which will be closely watched to gauge how juries may respond to evidence and testimony that will be repeated throughout the litigation if a global settlement is not reached.

However, Johnson & Johnson’s continuous use of bankruptcy filings has prolonged the litigation process and may cause a further postponement of any planned trial date. The company and its subsidiaries have repeatedly requested that litigation be halted while bankruptcy plans are under consideration, a tactic that could extend these delays if the proceedings are successfully stayed again.

Attorneys for the plaintiffs have pointed out that many of the women they represent have either died or are in declining health as these delays prevent them from having their day in court.

The company indicates it has already resolved 95% of claims alleging talcum powder exposure led to cases of mesothelioma. The remaining cases are primarily gynecological cancer claims, mainly dealing with cases of ovarian cancer. In addition, Johnson & Johnson has pledged to remove talc from its Baby Powder products, although the company has denied health risks associated with the products.