Product Liability

Can Johnson & Johnson legally avoid its talc liabilities?

November 2, 2021

There are approximately 29,000 talc claims currently pending in Federal Court alleging a link between J&J’s talc and ovarian cancer or asbestos cancer mesothelioma. While continuing to deny liability for devastating injuries to thousands of women, J&J is pursuing a strategy known in legal circles as the “Texas Two Step” authorized under Texas law.

As previously reported in the Gavel, Johnson & Johnson is pursuing questionable financial and legal tactics to potentially avoid liability for women who have developed ovarian cancer and mesothelioma as a result of long-term exposure to its talc products.  

There are approximately 29,000 talc claims currently pending in Federal Court alleging a link between J&J’s talc and ovarian cancer or asbestos cancer mesothelioma. While continuing to deny liability for devastating injuries to thousands of women, J&J is pursuing a strategy known in legal circles as the “Texas Two Step” authorized under Texas law.  

It’s a complicated corporate transaction, but essentially J&J has created a new subsidiary “LTL Management LLC” (“LTL”) to which it has assigned all of its potential talc liabilities (Step One). Then J&J has attempted to have LTL file bankruptcy with talc plaintiff’s recovery limited to whatever monies J & J decides to fund LTL with (Step Two).  J&J is arguing that as a result of this strategy plaintiffs cannot pursue claims against the consumer products giant as they no longer are responsible for these potential liabilities under the automatic “stay” provisions provided by Chapter 11 of the Bankruptcy Code.

J&J filed for bankruptcy pursuant to this divisive plan on October 14, 2021 and has pledged to fund LTL with $2 billion to cover its potential talc liabilities. While J&J has argued that $2 billion is reasonable, attorneys for talc plaintiffs assert that the number necessary to fairly compensate their clients is in excess of $30 billion.

The bankruptcy case is currently being handled by U.S. Bankruptcy Judge J. Craig Whitley in North Carolina Federal Court. Judge Whitley has initially declined to block talc suits against J&J, stating that he would consider extending the Chapter 11 stay of litigation to J&J at a hearing set for November 4, 2021. Judge Whitley ruled that claims against the parent company (J&J) can proceed until the November 4th hearing because he didn't have sufficient evidence that the company had an identity of interest with LTL or that it didn't have its own independent liability for the talc injury claims. He stated:

"I don't know whose liabilities these are, but the evidence presented today gives me grave concerns that these may be independent liabilities of the Johnson & Johnson company that were not subject to the divisional merger and were not brought into these bankruptcy cases."

Judge Whitley has also raised concerns about whether his court was the appropriate venue for the bankruptcy and whether he should be deciding the fate of the thousands of pending talc cases. "I can think of no reason offhand why the Western District of North Carolina has to be the arbiter of that for all circuits and all courts," he said. He set Nov. 10 as the hearing on the venue change.

Plaintiffs' attorneys are outraged and are determined to challenge the company's legally gray strategy of saddling an underfunded bankrupt subsidiary with its billions in talc liability.  Melanie Cyganowski, counsel for the plaintiff's steering committee in the Talc MDL stated: "They are using the bankruptcy process as a weapon to avoid their corporate responsibilities."

Plaintiff's attorney Ted Meadows of Beasley, Allen, Crow, Methvin, Portis & Miles PC, argued: "If J&J thinks this is going to throw water on the fire and keep plaintiffs' lawyers and their clients from fighting, I'm hearing different from my clients. They have greater resolve." Meadows further said of J&J: "This is a half-trillion dollar company with a credit rating better than the U.S. government. They're not poor. They just don't want to take a hit on their stock price, and they don't want to have to stand up and do the right thing and say 'We did wrong.'"

J&J said in a statement announcing LTL's bankruptcy filing that it believes the case will allow all parties to be treated equitably, and that it is not conceding any liability related to the talc claims. This established process will allow for a more efficient and consistent resolution for all parties. While LTL pursues this equitable resolution, all cosmetic talc cases will be stayed pending the outcome of the proceedings.

Whether J & J’s questionable strategy will be successful or not is still yet to be determined. Nevertheless, our firm continues to pursue claims on behalf of the injured parties.

We're here to help

If you, like thousands of other women, have used talcum powder regularly and subsequently developed ovarian cancer or mesothelioma, you may be eligible for compensation without ever going to court. To see if you are eligible, click HERE for more information and to complete a short intake and a legal representative will contact you to review your case. We don’t get paid unless you do.

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