Johnson & Johnson (J&J) has said it's agreed to pay $8.9 billion to settle tens of thousands of lawsuits alleging that talc in its iconic Baby Powder and other products caused cancer.
The amount dwarfs J&J’s original offer of $2 billion.
The agreement follows a January appeals court ruling invalidating J&J’s controversial “Texas two-step” bankruptcy manoeuvre, in which it sought to offload the talc liability onto a subsidiary that immediately filed for Chapter 11.
The J&J subsidiary, LTL Management, filed for bankruptcy protection late Tuesday for a second time with the intent to present a reorganisation plan containing the proposed settlement to a judge as soon as May 14, the subsidiary said in a court filing. J&J said in a statement that about 60,000 talc claimants had agreed to the proposal.
The J&J subsidiary filed for bankruptcy in New Jersey, the same jurisdiction where it faced the appeals court defeat. J&J crafted new financing arrangements with its subsidiary to avoid running afoul of the appeals ruling, the subsidiary said in a court filing. The ruling determined LTL Management had no legitimate claim to bankruptcy because it was not in financial distress.
The appeals court rejection effectively raised the price tag for J&J to rid itself of the sprawling talc litigation, after plaintiffs’ lawyers had resisted the company’s tactics and prevailed. J&J’s board met over the weekend and approved paying the vastly larger settlement to current and future plaintiffs with various gynecological cancers and mesothelioma, according to Mikal Watts, one of the plaintiffs’ lawyers who negotiated the agreement.
J&J reiterated on Tuesday that its talc products are safe. Company lawyers said talc claims lacked scientific merit and accused plaintiffs’ lawyers of continuing to advertise for clients in the hopes of extracting large financial sums.
A December 2018 Reuters investigation revealed that J&J knew for decades about tests showing its talc sometimes contained carcinogenic asbestos but kept that information from regulators and the public. J&J has said its Baby Powder and other talc products do not cause cancer and do not contain asbestos.
The company announced in 2020 that it would stop selling its talc Baby Powder in the U.S. and Canada due to what it called "misinformation" about the product and later announced its intent to discontinue it worldwide in 2023.
The company still faces significant risk that other plaintiffs could continue to oppose the settlement and appeal the case again to the same court that has already rejected the subsidiary bankruptcy — the 3rd U.S. Circuit Court of Appeals in Philadelphia.
Attorneys representing thousands of plaintiffs issued a release late Tuesday opposing the settlement. “This sham deal does not even pay for most victims’ medical bills,” said Jason Itkin, founding partner of the Houston-based personal injury law firm Arnold & Itkin LLP.