Facing more than 38,000 lawsuits by mesothelioma and ovarian cancer victims over its asbestos-tainted talc products, Johnson & Johnson (J&J) recently attempted a legal maneuver called “The Texas Two-Step,” which would shield it from liability by creating a subunit that would file for bankruptcy.
A group of seven of the nation’s most highly-respected law professors are seeking approval to file an amicus “friend of the court” brief, in opposition to J&J’s effort to form the subunit, LTL Management and then declare it bankrupt so it will no longer have to face steep talc litigation payments.
Amicus briefs are filed by parties that don’t have any skin in the game; the people filing the brief are neither plaintiffs or defendants. However, should the motion be approved, the lawyers’ brief would provide authoritative and relevant information that could help decide the case’s outcome.
According to Mesothelioma.net, the move by the attorneys is highly unusual but points to the deep concern the group has about J&J’s abuse of the bankruptcy process. If J&J is allowed to spin off its talc liability to a bankrupt entity, mesothelioma and ovarian cancer patients will have their share of compensation significantly diminished.
To date, J&J, which is valued at over $450 billion, has paid out more than $3 billion in settlements or verdicts related to its allegedly-contaminated talc products. The company has spent an additional $1 billion in talc defense costs.
The professors filing the amicus brief are chiefly concerned with the legal precedent J&J’s bankruptcy plan would create, should it be finalized.
“We all share a belief that this is not a valid reason for accessing the substantial powers that Congress gave to bankruptcy judges,” Jared Ellias, a professor at the University of California’s Hastings College of the Law and one of the brief’s signatories, told Endpoints News. “That creates worry I think for all of us like we said in the brief, the precedent this sets either in terms of other companies emulating this tactic or potentially broad rulings from upper courts that limit the usefulness of the bankruptcy system.”
According to Endpoint News, in addition to Ellias, the other professors who signed the amicus brief include: Kenneth Ayotte of the UC Berkeley School of Law; Susan Block-Lieb of the Fordham University School of Law; Diane Lourdes Dick of the Seattle University School of Law; Bruce Markell of the Pritzker School of Law at Northwestern University; Robert Rasmussen of the USC Gould School of Law; and Yesha Yadav at the Vanderbilt University Law School.
In 2020, J&J pulled its talc-based products from the North American marketplace because of declining sales and the negative publicity surrounding high-profile consumer talc trials, including a 2018 case in Missouri that awarded 22 women $4.7 billion in damages.
In other J&J talc-related news, The Guardian is reporting that the company may soon face a shareholder vote that would decide whether talc-based baby powder should be pulled from the market worldwide.
