J&J loses third attempt to settle cancer litigation in bankruptcy court
Johnson & Johnson said it would return to regular civil court to resolve the over 90,000 claims against it.
Johnson & Johnson slipped in premarket trading after a federal judge rejected its third attempt to settle over 90,000 claims that its talcum powder caused cancer in one fell swoop.
US Bankruptcy Judge Christopher Lopez on Monday evening said that Johnson & Johnson’s execution of a $9 billion settlement with cancer victims proposed last year was flawed. The company denies that talc-based baby powder is harmful, though it stopped selling the product worldwide in the past few years.
This is Johnson & Johnson’s third attempt at a “Texas two-step” bankruptcy, in which a company creates a subsidiary, offloads assets that are subject to litigation there, then files for bankruptcy. Once bankrupt, Johnson & Johnson (or rather, its subsidiary, Red River Talc) could end all current and future talc claims if it secures approval from 75% of claimants on its settlement proposal.
About 83% of plaintiffs, many eager to get a payout sooner rather than later, agreed to the proposal, according to Johnson & Johnson. In a statement following the ruling, Johnson & Johnson said that it would return to regular civil court to resolve the claims and called the talc litigation “plaintiff-lawyer driven fake tort, premised on junk science and fueled by third party litigation financing including from foreign sovereign wealth funds.”
