Bankruptcy judge freezes Johnson & Johnson’s talc lawsuits

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A federal bankruptcy judge reportedly froze more than 38,000 lawsuits alleging that Johnson & Johnson’s baby powder and other talc products caused cancer to allow more time to reach a settlement.

During an April 20 hearing in Trenton, Judge Michael Kaplan also halted any trials over talc claims, but said new lawsuits can be filed against LTL Management, a subsidiary set up by the New Brunswick-based health conglomerate to handle cases, Reuters reported. 

Proceedings will remain on hold until mid-June, the judge also ruled.

Earlier this month, J&J proposed an $8.9 billion settlement over the next 25 years to resolve current and future talc claims. The plan was disclosed along with the company’s decision to refile LTL for bankruptcy.

A previous Chapter 11 petition was rejected earlier this year by the Third Circuit Court in Philadelphia, which ruled that neither J&J nor its subsidiary was in “financial distress.” The strategy – known as the Texas two-step – has kept the lawsuits frozen for 18 months.

Dismissal of the latest bankruptcy filing would return those cases back to the civil tort system.

According to J&J, the new settlement proposal – which is $6.9 billion more than the $2 billion previously committed in connection with LTL’s initial bankruptcy petition – has support from more than 60,000 claimants. The company has also continued to maintain the products are safe.

In a statement following Thursday’s hearing, Erik Haas, J&J’s worldwide vice president of litigation, said, “The decision is a win for claimants, who are now one step closer to being able to vote for themselves on whether to accept the proposed resolution. We are confident the vote will overwhelmingly support the proposal, as it presents the only equitable path forward.”

“The proposal commits $8.9 billion to claimants, whose claims otherwise would languish in the tort system for decades and, based upon the trial record to date, likely would not receive a single dollar. Major plaintiffs’ law firms representing the vast majority of the claimants in this litigation support the plan, including lawyers who previously led the opposition to the first bankruptcy filing,” he added.

Haas went on to say, “Despite this support, we expect a few plaintiffs’ law firms will continue to oppose and seek to delay this plan. The evidence presented to the court this week shows that these firms have a profit motive to remain in the tort system that is at odds with the interests of their clients. When presented with a clear and complete explanation and the opportunity to make an informed choice, we firmly believe the claimants will approve the plan.”