As mediation talks between Johnson & Johnson (J&J) subsidiary, LTL Management LLC, and plaintiffs continue to stall, a U.S. bankruptcy judge has suggested that he may appoint an independent expert to play a role in assessing the value of J&J baby powder lawsuits. Bankruptcy Judge Michael Kaplan shared this latest update at a recent court hearing. Mediation talks have so far failed to produce a viable framework for settling the numerous baby powder lawsuits.
Judge Kaplan suggested that an independent valuation opinion may be a quicker way to end the impasse. Both sides have proposed viable frameworks to settle these baby powder lawsuits, but neither side will agree. LTL Management has proposed a year-long process to estimate the value and the number of baby powder claims. Plaintiffs in these cases have asked the court to permit some of the lawsuits to resume outside the bankruptcy court.
A hearing is expected to be held on July 26, at which time Judge Kaplan will decide the next steps. The judge will hear from both the plaintiffs and LTL Management. Already the judge has shared that he is concerned about the possibility of re-opening some of the lawsuits, which may lead to duplicate litigation in multiple courts.
Justice Department Sides with Plaintiffs in Bankruptcy Appeal
On June 30, the U.S. Department of Justice bankruptcy watchdog stated that J&J had abused the bankruptcy system when it used it to pause the 38,000 baby powder lawsuits. J&J spun off LTL Management and assigned the baby powder lawsuit liabilities to this off-shot, and then declared the company bankrupt.
The U.S. trustee Andrew R. Vara filed a brief with the United States Court of Appeals for the Third Circuit, urging the court to dismiss the bankruptcy case. Within the brief, Vara stated that J&J used LTL Management’s bankruptcy filing as “a weapon against tort claimants rather than a good-faith means of reorganization.” J&J attorneys shared an email statement: “Unlike the tort system, the bankruptcy system has an established process to fairly and efficiently resolve all cases.”
Baby Powder Lawsuits
In 2009 the first lawsuit was filed against J&J, alleging that using its baby powder caused cancer. Since 2009, around $3.5 billion has been awarded in verdicts and settlements to plaintiffs. Some baby powder settlements have been overturned in the approval process, equalling hundreds of millions of dollars.
In 2019 many U.S. stores pulled J&J baby powder off their shelves as the volume of health risks increased. Nearly a year later, in 2020, the company discontinued its talc-based baby powder in the U.S. and Canada. The company said the discontinuation of the talc-based baby powder was due to a sales drop because of the mounting lawsuits and misinformation about the product’s safety.
Throughout the allegations and the lawsuits, J&J has maintained that its baby powder product is safe for consumers. The company stands by its product, asserting that the product is safe and does not contain asbestos. A statement issued in response to the LTL bankruptcy highlighted this fact. “We stand behind the safety of Johnson’s Baby Powder, which is safe, does not contain asbestos, and does not cause cancer. We continue to believe resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders. We will continue to follow the process and put forth our position in the court.”
It’s estimated that before LTL Management’s bankruptcy filing, J&J had spent nearly $1 billion in defense costs. Verdicts and settlements amounting to $3.5 billion have also cost J&J. One verdict amounting to $2 billion was awarded to 22 women. As part of this verdict, J&J was accused of not warning consumers about the health risks of asbestos and not disclosing the presence of asbestos in their product.