A group of cancer victims asked a federal judge to block Johnson & Johnson’s proposed bankruptcy settlement over tens of thousands of lawsuits alleging that the company’s baby powder and other talcum powder products caused their illnesses, according to Reuters.
The victims filed a motion late Tuesday night in a New Jersey court seeking a temporary restraining order to prevent a J&J subsidiary from declaring bankruptcy in Texas or another jurisdiction outside New Jersey.
The plaintiffs claim they will suffer “irreparable harm” if the court does not block the filing of such a lawsuit. Meanwhile, J&J intends to declare bankruptcy for the subsidiary after the plaintiffs vote on the $6.48 billion settlement proposal. The company hopes to secure the support of 75 per cent of the claimants as part of a ready-made bankruptcy plan. J&J set a deadline of 26 July for the vote. Erik Haas, J&J’s worldwide vice president of litigation, stated:
This is yet another meritless pleading by the same small group of plaintiff law firms who have fought every single effort to resolve this litigation to date.
Haas reiterated longstanding allegations that opposing plaintiffs’ attorneys were demanding additional fees not possible in bankruptcy and were putting their economic interests ahead of those of their clients.
We therefore will immediately ask the Court to reject this frivolous filing.
The company faced lawsuits from more than 61,000 plaintiffs alleging that its talcum powder caused ovarian cancer or mesothelioma, a deadly cancer linked to asbestos exposure. However, J&J claims its talc is safe, asbestos-free and does not cause cancer.
Bankruptcy settlement
J&J argues that the bankruptcy settlement provides fair and equitable payments to plaintiffs, unlike the civil justice system in which most plaintiffs receive nothing and some get overly large amounts of compensation.
Earlier this week, Haas announced growing support for J&J’s proposed bankruptcy settlement, including from lawyers representing more than 70,000 plaintiffs. That figure includes plaintiffs who have not yet sued J&J.
The medical conglomerate has twice attempted, but failed, a two-stage bankruptcy manoeuvre in Texas aimed at ending current and future talcum powder lawsuits.
The strategy involves creating a subsidiary to take over J&J’s talc liabilities. It then declares bankruptcy to resolve the cases while the company continues to operate free from its own Chapter 11 filing. Two courts have previously found that the J&J subsidiary does not suffer the “financial distress” necessary to legitimise a bankruptcy filing.
J&J’s plan seeks to settle bankruptcy claims by women with ovarian cancer and other gynaecological conditions allegedly related to talcum powder. The company has settled most mesothelioma cases out of bankruptcy. J&J also entered into a separate $700 million agreement this week to settle claims by state attorneys general.
