October 14 (Reuters) – Johnson & Johnson (JNJ.N) filed tens of thousands of legal claims on Thursday alleging that its baby powder and other talc-based products were causing cancer, discharging possible liabilities to a newly created subsidiary.
J&J filed the talc claims with an entity called LTL Management LLC, which filed for bank protection Thursday in North Carolina, according to company records and the courts. J&J and its affiliates were not part of the bankruptcy filing.
Tens of thousands of plaintiffs have reported J & J’s Baby Powder and other talc products containing asbestos and causing cancer, which the company denies. Among the plaintiffs are women suffering from ovarian cancer and others battling mesothelioma.
J&J executed Thursday’s corporate reshuffle through a contentious legal maneuver known as a two-step bankruptcy in Texas, a strategy that other companies facing asbestos litigation have used.
In the process, a J&J business split in two through a so-called divisional merger under Texas law. This transaction created LTL, the new entity that had J&J’s talc liabilities, according to court documents filed Thursday.
J&J, with a market value of more than $ 400 billion, said talc cases would be stopped while LTL navigates bankruptcy proceedings.
The company’s costs of defending nearly 40,000 cases have approached $ 1 billion, bankruptcy court filings filed Thursday. The agreements and verdicts have cost J&J about $ 3.5 billion more.
“We are taking these actions to bring certainty to all parties involved in cosmetic talc cases,” J&J General Counsel Michael Ullmann said in a statement.
“While we remain firmly behind the safety of our talc cosmetics, we believe that resolving this issue as quickly and efficiently as possible is in the best interest of the (company) and all stakeholders,” Ullmann added. .
Plaintiffs’ attorneys denied filing for bankruptcy. “J&J’s bankruptcy trick is as despicable as it is blatant” and “an unconscious abuse of the legal system,” said Linda Lipsen, chief executive of the American Justice Association, a group of lawyers on trial.
J&J said it would fund LTL’s legal costs for talc cases in an amount later determined by a bankruptcy judge, with an initial advance of $ 2 billion. L&T has also received certain copyright revenue streams with a current value of more than $ 350 million to contribute to possible legal costs, J&J said.
HIGH PARTICIPATION LITIGATION
Reuters first reported in July that J&J was exploring to unload its talc liabilities and put them into bankruptcy.
Thursday’s move moved high-stakes J&J talc security litigation from U.S. courtrooms to court proceedings before a federal bankruptcy judge that could force an agreement between the blue company and the plaintiffs.
During previous discussions on a settlement, a J&J attorney told plaintiffs’ attorneys that the company could pursue the bankruptcy plan, which could result in lower payments for unresolved cases, Reuters previously reported. .
In the weeks leading up to Thursday’s filing for bankruptcy, attorneys representing women with cancer claims asked several judges to ban J&J from performing the maneuver, and only be denied.
The company maintained in statements and lawsuits over the summer that it had not decided whether to continue the maneuver.
A 2018 Reuters investigation found that J&J had known for decades that asbestos, a known carcinogen, was hidden in its baby powder and other talc cosmetics. The company stopped selling Baby Powder in the United States and Canada in May 2020, in part because of what it called “misinformation” and “baseless allegations” about the talc-based product.
J&J maintains that its consumer talc products are safe and confirmed through thousands of asbestos-free tests.
In insolvency court documents, attorneys for the newly formed J&J subsidiary said the filing of Chapter 11 was “necessary for a relentless assault by the plaintiff’s trial bar, based on the false allegations that the plaintiffs.” Talc products contain asbestos and cause cancer “.
In June, the U.S. Supreme Court declined to hear J&J’s appeal of a Missouri court ruling that resulted in $ 2 billion in damages awarded to women alleging that the talc in the U.S. company caused her ovarian cancer.
J&J has prevailed in other recent cases of talc.
Reports by Mike Spector in New York and Dan Levine in San Francisco; Additional reports by Amruta Khandekar and Nate Raymond in Boston; Edited by Peter Cooney and Cynthia Osterman
Our standards: the principles of trust of Thomson Reuters.