After a 17-month stay on talc cancer lawsuits against Johnson & Johnson, approximately 38,000 cases are ready to resume, after an appeals court ruled March 22 that it would not rehear its initial decision made in late January to reject the company’s controversial plan to use the bankruptcy system to offload its legal liabilities onto a newly created subunit.
After the unanimous 3-0 decision by the U.S. Third Circuit Court of Appeals in Philadelphia, J&J announced it would petition the U.S. Supreme Court to hear the case.
In October 2021, J&J formed a new entity, LTL Management. Just days later, LTL Management filed for Chapter 11 bankruptcy protection. Talc cancer plaintiffs and their attorneys as well as other advocates heavily criticized the move by J&J, alleging that the legal maneuver, dubbed the “Texas Two Step,” exploits the U.S. bankruptcy code.
The Third Circuit originally rejected J&J’s plan to escape talc litigation in early January, ruling that because the company had $400 billion in equity, it was not in financial distress.
In 2018, J&J was ordered to pay 20 women with ovarian cancer $4.7 billion following a jury trial in Missouri. Although that award was later reduced to $2.1 billion, the verdict stands following 2021’s refusal by the Supreme Court to review the case. Last year, J&J offered to resolve talc claims for $2 billion, an amount that talc plaintiffs claim is insufficient, considering the 2018 $2.1 billion plaintiff verdict at just one trial.
Talc plaintiffs claim that long term usage in the genital area of J&J’s Shower-to-Shower product and/or its talcum baby powder, the latter of which the company stopped selling in 2020, caused them to develop ovarian cancer because of asbestos contamination. Talc and asbestos are both minerals that are often found right next to each other in the earth. In 2018, a Reuters investigation revealed that J&J knew for decades that its talc products could be contaminated with asbestos. In 2019, 33,000 bottles of J&J Baby Powder were recalled because traces of asbestos were found.