Johnson & Johnson (NYSE: JNJ) is negotiating with plaintiffs’ lawyers who have been trying to oppose the company’s settlement of lawsuits alleging its baby powder and other talc related products cause cancer, trying to avoid holdouts and subsequent lawsuits.
The company announced on Friday that it has plans to finalize a USD$6.4 billion global settlement by putting a subsidiary company through bankruptcy proceedings after losing in federal courts.
J&J says that most claimants support its settlement offer. However, it has temporarily paused the vote count to gather additional votes from plaintiffs who have recently opposed the deal.
“We have agreed to a short extension of the certification timeline,” said Erik Haas, J&J’s worldwide vice president of litigation, in a statement. “This will allow these plaintiffs’ attorneys time to speak to their claimants to now consider supporting the plan.”
J&J plans to place a subsidiary into bankruptcy if at least 75 per cent of the talc claimants vote for its settlement proposal. The bankruptcy settlement would end all talc lawsuits alleging that J&J products cause ovarian cancer and would prevent similar cases from being filed in the future.
More than 62,000 plaintiffs are suing J&J, alleging that its baby powder and other talc products were contaminated with asbestos and caused ovarian and other cancers. Consequently, J&J denies the allegations, asserting that its products are safe, do not contain asbestos, and do not cause cancer.
By using a subsidiary’s bankruptcy to file, J&J seeks to force all plaintiffs into one settlement without filing for bankruptcy itself. Bankruptcy judges can enforce global settlements, permanently halting all related lawsuits and preventing new ones.
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Bankruptcy settlement focuses on ovarian cancer claims
Andy Birchfield, a lawyer leading the opposition to Johnson & Johnson’s proposed bankruptcy settlement, said he welcomes negotiations with claimants but is prepared to resist another Chapter 11 filing.
“For now, we are continuing to fight for our clients and if J&J chooses the bankruptcy route for the third time, we will oppose it and we believe the company will fail,” said Birchfield.
The current proposed bankruptcy settlement focuses on claims involving ovarian and other gynecological cancers. Furthermore, it builds on the company’s previous settlement outside of Chapter 11 proceedings, which resolved most lawsuits alleging that its talc caused mesothelioma, a deadly cancer linked to asbestos exposure.
Even if J&J reaches a settlement with some claimants, holdouts or future plaintiffs would still have the right to sue, leaving the company vulnerable to potential multibillion-dollar verdicts. This exposure led J&J to pursue a bankruptcy settlement.
While J&J has won many ovarian cancer cases, some have resulted in significant verdicts for plaintiffs, including a USD$2.1 billion award to 22 women who attributed their ovarian cancer to asbestos in J&J talc.
The company has been dealing with asbestos-related concerns in its talc products for several decades.
The issue gained attention in the early 1970s when internal documents surfaced indicating that the company had been aware of potential asbestos contamination in its talc as far back as the 1950s and 1960s.
However, the legal battles and public scrutiny intensified in the 2010s as plaintiffs began filing lawsuits alleging that the company’s talc products, including baby powder, caused ovarian cancer and mesothelioma due to asbestos contamination. The first large verdict against the company happened in 2016, which triggered a string of lawsuits and significant awards to plaintiffs.
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