Did Johnson & Johnson Jeopardize Its Employees’ Retirement Funds Because It Failed To Disclose Asbestos Contamination in Talc Baby Powder?

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A U.S. District Judge, Freda L. Wolfson, granted Johnson & Johnson (J&J)’s motion to dismiss an Employee Retirement Income Security Act (ERISA) case on February 26. Wolfson, a New Jersey federal judge, dismissed a proposed class action ERISA case put forward by three ex- J&J employees. 

Judge Wolfson tossed out the case previously in April 2020, and gave the ex-employees the opportunity to strengthen their case. However, as reported by Law360.com, Wolfson ruled their argument failed to be more convincing this time around. 

The J&J ex-employees have the option of filing an amended version of their suit within 30 days.

If Judge Wolfson accepts the ex-worker’s argument the next time around, the class action would pit them against J&J, the company’s Chief Human Resources Officer Peter Fasolo, its retired Chief Financial Officer Dominic Caruso and the overseers of its two retirement plans from January 2019, Law360.com reports. 

The three ex-workers accuse the defendants of disregarding ERISA rules, knowing that J&J stock would likely fall when or if it became known to the public that the company knew for decades that its finished talc powder could at times be contaminated with asbestos

In June 2020, J&J announced it would no longer sell its iconic talcum baby powder in North America. Four months later, the company announced it would settle 1,000 talc lawsuits for $100 million. And one month after the settlement announcement, the Missouri Supreme Court refused to toss out a 2018 lower court’s ruling that awarded 22 women $2 billion for damages they allegedly sustained because of long-term usage of talcum powder in the genitals area. All 22 women developed ovarian cancer. Six of the plaintiffs have died since their claims were filed. J&J will ask the U.S. Supreme Court to review the case, but the high court only reviews up to approximately 150 cases out of the 7,000 requests it receives each year.

Moreover, just last week, J&J’s regulatory filing included the setting aside of nearly $4 billion for litigation, which may include a settlement for over 20,000 additional talc lawsuits not covered in the $100 million settlement. 

After the Reuters report, titled, “Johnson & Johnson knew for decades that asbestos lurked in its Baby Powder,” was published J&J’s stock did indeed take a steep dive. 

In September 2019, J&J moved to dismiss the ERISA suit, alleging that workers should have proposed an alternative plan to shield J&J’s stock price. In response, J&J employees countered that the company should have simply told the truth. However, Judge Wolfson asserted that the ex-workers failed to show how disclosing the asbestos contamination earlier would have prevented a 10% decline in stock price.

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