Johnson & Johnson has set aside $8.9 billion to cover ongoing lawsuits that claim its baby powder containing talc caused cancer. This new amount quadruples the original $2 billion the company had set aside for ongoing litigation.
To date, over 38,000 talc baby powder lawsuits have been filed against the pharmaceutical company. Women, who are the main plaintiffs, claim J&J talc-based baby powder and similar cosmetic products contain toxic chemicals, specifically asbestos. Asbestos is known to cause several types of cancer, including ovarian, lung and mesothelioma, which strikes the lungs or other organs. Plaintiffs who regularly used J&J’s products as a perineal antiperspirant and deodorant later developed ovarian cancer.
J&J has still never admitted to any wrongdoing. In 2017, talc-based baby powder contributed over $420 million to the company’s $76.5 billion in revenue. However, in early 2020, the company announced it would discontinue talc-based baby powder in the U.S. and Canada due to a drop in sales. As consumers continue to speak out, J&J announced in 2022 that it would discontinue all talc-based baby powder sales globally. Cornstarch will replace the main ingredient.
In March 2022, J&J executed a legal maneuver known as the Texas two-step. Considered controversial by many legal experts, the tactic involved dividing its consumer business into two separate entities. J&J created a new company in Texas where it’s allowable to divide a corporation in two. Then, J&J transferred all the talc lawsuits to this new subsidiary. LTL Management, named in the filing, took on the talc lawsuits while declaring bankruptcy in North Carolina.
Because LTL Management was protected under bankruptcy laws, all baby powder lawsuits were put on hold. At that time, several cases were close to a verdict. Before the bankruptcy filing, J&J lost a case where 22 women were awarded a judgement of more than $2 billion for their claims that baby powder caused cancer.
In January 2023, the 3rd U.S. Circuit Court of Appeals dismissed the bankruptcy filing by LTL Management through a 56-page opinion. In court documents, the 3-judge panel explained the dismissal was due to the fact LTL Management was only created to access the bankruptcy system, and the company was not truly in financial distress.
Despite the dismissal, on April 4, 2023, LTL Management filed for bankruptcy protection a second time in New Jersey, the same jurisdiction where the 3rd U.S. Circuit Court of Appeals resides. LTL management stated they would refile for Chapter 11 bankruptcy protection with the intent to present a reorganization plan containing the new proposed settlement of $8.9 billion to a judge by May 14, 2023.
If approved, this plan would result in one of the largest product liability settlements in U.S. History. LTL Management has also stated the money will be paid out over 25 years. Johnson & Johnson is looking to gain further support for their new plan through existing claimants. It’s reported that LTL Management believes it has the support of 70,000 to 80,000 claimants, but attorneys representing claimants disagree.