The U.S. Third Circuit Court of Appeals in Philadelphia has dismissed a Chapter 11 petition filed by a recently created subsidiary of Johnson & Johnson (J&J) called LTL Management, which would have allowed the pharmaceutical giant to avoid having to pay out billions in trial awards for its cancer-causing talc baby powder.
J&J created LTL Management back in October to address the more than 38,000 talc baby powder lawsuits that resulted in $3.5 billion in verdicts and settlements, including one case in which 22 women were awarded a judgment of over $2 billion.
What would have happened, had the Third Circuit Court not struck down this little scheme, is that J&J would have shifted all liability for these verdicts and settlements onto LTL Management, which is just a shell holding company where all that liability would have gone to die.
"Applied here, while LTL faces substantial future talc liability, its funding backstop plainly mitigates any financial distress foreseen on its petition date," a three-judge panel wrote, further noting that "good intentions" such as protecting the "J&J brand or comprehensively resolve litigation ... do not suffice alone."
(Related: Last spring, J&J decided to stop selling personal care products in Russia after Vladmir Putin decided to launch a "special operation" in Ukraine.)
J&J trying to "pervert the bankruptcy system," says lawyer representing mesothelioma victims
J&J spokesperson Allison Fennell announced that the company plans to appeal this decision, adding that the talc products in question are safe and do not cause cancer as the lawsuits in question determined.
"As we have said from the beginning of this process, resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders," Fennell told the media.
"We continue to stand behind the safety of Johnson's Baby Powder, which is safe, does not contain asbestos, and does not cause cancer."
J&J previously lost a bid to dispose of all the talc litigation with an appeal. After that failed, the company shifted to creating this LTL Management subsidiary, which it hoped would absorb all that litigation to protect the company against having to pay out billions in verdicts and settlements.
The plaintiffs in all these cases against J&J celebrated the Third Circuit Court's ruling, stating that the decision "is a point-by-point rejection of J&J's attempt to pervert the bankruptcy system and trample the constitutional right to a jury trial of all Americans harmed by deadly products," announced Jon Ruckdeschel, a lawyer representing numerous victims of mesothelioma.
"Bankruptcy courts are for honest companies in financial distress, not billionaire mega-corporations like J&J, 3M, and Koch Industries that seek to close courthouse doors to their victims."
The bankruptcy court "relied on unsupported speculation and improper evidence," wrote attorneys representing some 7,000 talc personal injury claimants last fall, adding that the bankruptcy court also "used unfounded estimates."
J&J will now have to appeal this latest decision with the U.S. Supreme Court, this being "the only prospect left," according to legal scholar Carl Tobias, "which grants review in a miniscule percentage of appeals."
In other words, J&J has pretty much run out of options and will have to pay up for all those verdicts and settlements. There is more than likely no way for the company to slither out of having to make things right for the tens of thousands of victims damaged by its talc baby powder.
Since the rulings on these lawsuits, J&J has stopped selling all talc baby powder products both in the United States and Canada. All remaining sales of the product elsewhere in the world will cease in 2023.
More related news about corporate fraud can be found at Corruption.news.
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