J&J talc unit faces skepticism on bankruptcy

A Johnson & Johnson company
on Tuesday defended its second attempt to resolve talc lawsuits
in bankruptcy, telling a U.S. judge it can quickly build
consensus around its $8.9 billion settlement offer despite
doubts about its assertion that 60,000 plaintiffs would support
the deal.
The proposed settlement has divided lawyers representing
cancer victims, many of whom claimed ahead of Tuesday’s court
hearing before U.S. District Judge Michael Kaplan in Trenton,
New Jersey that J&J had created the illusion of widespread
support for a deal that would deny plaintiffs just compensation.
Linda Richenderfer, an attorney for the U.S. Trustee – the
U.S. Department of Justice’s bankruptcy watchdog – said in court
that J&J subsidiary LTL Management had not adequately explained
its assertion that two-thirds of talc claimants would support
the deal, especially given opposition from lawyers representing
plaintiffs who were active in LTV’s first bankruptcy.
“We just can’t reconcile that with the numbers that were in
front of us in the first bankruptcy case,” the DOJ’s Linda
Richenderfer said. “Where are these claimants coming from and
who are these claimants?”
Kaplan said he shared Richenderfer’s concerns, but would not
take any action to stop LTL’s second bankruptcy filing until he
gets more information.
J&J faces more than 38,000 lawsuits that have been
consolidated in federal court in New Jersey alleging that its
talc products sometimes contained carcinogenic asbestos, and
those cases have been on hold while LTL pursues a bankruptcy
settlement. J&J has said its baby powder and other talc products
are safe, do not cause cancer or contain asbestos.
In 2021, J&J divided its consumer business in two and
offloaded the talc lawsuits onto a newly created subsidiary that
almost immediately filed for Chapter 11, a tactic that could
halt the lawsuits and force plaintiffs into a global settlement
in bankruptcy court.
LTL’s first bankruptcy case was dismissed as improper after
the 3rd U.S. Circuit Court of Appeals ruled that the company was
not in “financial distress.”
LTL attorney Greg Gordon said at Tuesday’s court hearing
that the second bankruptcy is different because the company has
fewer assets available and more support for a bankruptcy
settlement.
Lawyers for those who say use of J&J’s talc products caused
cancer on Tuesday spoke for and against the settlement, a day
after a faction of plaintiffs alleged that J&J’s settlement was
“fraudulently and collusively” co-signed by plaintiffs’
attorneys with “exaggerated” numbers of clients.
Gordon called that an “over the top accusation,” saying
plaintiffs’ support for the settlement is real and substantial.
Any doubts about it could quickly be put to rest by allowing
them to vote on the settlement, he added.
David Molton, who represented the official committee of talc
claimants in LTL’s first bankruptcy, said the second bankruptcy
filing must be dismissed so that cancer victims can have their
day in court.
“Hundreds of victims of J&J’s products have died waiting for
justice to be done,” Molton said.
Mikal Watts, who represents clients who support the deal,
said that the settlement offers the first real chance for women
with cancer to get a payout from J&J. The women should have a
chance to vote on the existing deal, Watts said.
Gordon said LTL is “still getting a handle on” the total
number of talc claims, but it believes it has support from
two-thirds talc claimants.
LTL’s proposed settlement would address not only the cases
that are pending in federal court, but also cases that have not
yet been filed.
It expects to file a formal bankruptcy plan by May 14.