J&J offers $8.9B to settle claims talc products caused cancer (updated)

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Johnson & Johnson plans to pay $8.9 billion over the next 25 years to resolve “current and future” claims that its baby powder and other cosmetic talc products caused cancer.

The proposed settlement was disclosed by the New Brunswick-based health conglomerate in an April 4 filing with the U.S. Securities & Exchange Commission, along with its decision to refile its subsidiary LTL Management for bankruptcy.

A previous Chapter 11 petition by LTL – a unit created in October 2021 to resolve talc-related claims – 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.” Following the appellate court rejection of the company’s motion to rehear the case last month, J&J said it would seek U.S. Supreme Court review.

The strategy – known as the Texas two-step – has kept the lawsuits frozen for 18 months. Dismissal of the Chapter 11 filing would return those cases back to the civil tort system.

During a meeting over the weekend, J&J’s board agreed to pay a vastly larger settlement to current and future claimants with various gynecological cancers and mesothelioma, Reuters reported, citing plaintiff attorneys who negotiated the deal.

The new settlement proposal is $6.9 billion more than the $2 billion previously committed in connection with LTL’s initial bankruptcy filing, according to the company. Additionally, it says more than 60,000 current claimants support the deal, which would require approval in bankruptcy court.

In a statement issued April 4, J&J said, “Importantly, neither LTL’s original filing nor this re-filing is an admission of wrongdoing, nor an indication that the company has changed its longstanding position that its talcum products are safe.”

“Johnson & Johnson and its other affiliates did not file for bankruptcy protection and will continue to operate their businesses as usual,” the company noted.

Erik Haas, worldwide vice president of litigation, Johnson & Johnson, said, “The company continues to believe that these claims are specious and lack scientific merit. However, as the bankruptcy court recognized, resolving these cases in the tort system would take decades and impose significant costs on LTL and the system, with most claimants never receiving any compensation.”

“Resolving this matter through the proposed reorganization plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner, and enables the company to remain focused on our commitment to profoundly and positively impact health for humanity,” he said.

Following LTL’s filing in United States Bankruptcy Court for the District of New Jersey, the 13 law firms representing the vast majority of claimants issued a statement of broad support for the proposed resolution.

Mikal Watts, one of the plaintiff lawyers, said, “This is the largest products liability settlement ever achieved after a bankruptcy filing. J&J committed $2 billion when it filed 18 months ago. Today, it committed $8.9 billion to fairly compensate these deserving women. Our job is to get our clients fairly paid for their injuries and this settlement is the culmination of a job well done.”

In an April 5 statement, Brian Glasser, an attorney at Bailey & Glasser and trial counsel to the official committee of claimants, said, “The last time J&J tried this they told the world that $2 billion was more than enough to satisfy these claims. The $9 Billion they have offered today makes plain that the prior number was ridiculous, the prior bankruptcy filing was a scam and the entire exercise was a misuse of the bankruptcy system. The court of appeals agreed and dismissed their case. An hour or so later they found $7 Billion in the company in seat cushions. But, LTL’s officers and directors apparently surrendered the right to get $61 Billon for this second alleged bankruptcy and for these same injuries.”

Glasser continued, “This is not over by a long shot. This case, too, ought to be dismissed. There is nothing that stops J&J from settling its cases outside of bankruptcy and that is what it needs to do.”

Prior to the first bankruptcy filing, J&J faced $3.5 billion in verdicts and settlements stemming from talc lawsuits.

However, more than 1,500 complaints have reportedly been dismissed and most cases that went to trial resulted in defense verdicts, mistrials or judgments for the company on appeal.

An annual filing with the SEC shows that J&J paid $7.4 billion in litigation expenses between 2020 and 2021, with the majority spent on legal costs related to talc claims.

Editor’s note: This story was updated at 8:38 a.m. April 5, 2023, to include a statement from attorney Brian Glasser.