For the time being, the world’s largest pharmaceutical company, Johnson & Johnson, is shielded from approximately 40,000 consumer talc product lawsuits, in which plaintiffs—the vast majority women—allege they developed either ovarian cancer, after years of applying talc products such as J&J’s talc baby powder to the genital area, or mesothelioma from inadvertently inhaling asbestos-tainted talc particles.
In order to escape more potentially-costly plaintiff verdicts in consumer talc cancer lawsuits, J&J took advantage of a Texas law that allows a corporate entity to create a subunit and dump all its legal liabilities into that newly created entity and subsequently declare Chapter 11 bankruptcy. (For this reason, the controversial maneuver is called the “Texas Two-Step.)
The U.S. Bankruptcy Judge who approved J&J’s subunit—LTL Management—bankruptcy plan has granted consumer talc product plaintiffs the ability to appeal his approval and also stated that the bankruptcy plan does not apply to talc lawsuits that stem from industrial settings.
As a result of Judge Michael Kaplan’s order, a new class action for industrial talc lawsuits against J&J may consolidate the cases of 1,000 plaintiffs, many of whom originally filed lawsuits decades ago, beginning in the 1980s.
According to The Mesothelioma Center, one such plaintiff, who worked at a talc mine J&J formerly owned in Vermont, died in 1994 but his family reopened the case, claiming that new evidence shows J&J withheld test results and falsified records, which led to the case being dropped.
Should the appeal of J&J’s consumer talc bankruptcy plan prove to be unsuccessful, payments to class members will likely be much lower than a settlement forced through more high-profile plaintiff verdicts at trial. LTL Management, the J&J subunit that declared Chapter 11, is holding $2 billion for a nationwide consumer talc settlement.