NEW YORK: A group of cancer victims sued Johnson & Johnson (J&J) recently, accusing the healthcare company of committing fraud through repeated and continued attempts to use a shell company’s bankruptcy to fix tens of thousands of lawsuits alleging its talc products contained asbestos and caused cancer.
Five plaintiffs, representing over 50,000 individuals who have sued J&J over its talc products, initiated the proposed class action in a New Jersey federal court. They claimed that J&J’s bankruptcy strategy was designed to place billions of dollars out of plaintiffs’ reach, aiming to “hinder, delay, and defraud these women and prevent them from ever having their day in court.”
“Johnson & Johnson is playing a dark game of chess with this country’s financial and judicial systems,” stated Mike Papantonio, an attorney for the cancer plaintiffs.
J&J’s worldwide vice president of litigation, Erik Haas, dismissed the lawsuit as a “Hail Mary pass” by plaintiffs’ lawyers who oppose their clients voting on the company’s latest proposed bankruptcy settlement. “Why are they very much desperate to stop the vote?” Haas asked. “Our focus has been and will remain on reaching a full, fair, and final resolution of this litigation, allowing the claimants to speak for themselves.”
Most of the talc lawsuits have been filed by women with ovarian cancer, with other cases involving individuals with mesothelioma, a deadly cancer linked to asbestos exposure. J&J maintains that its baby powder and other talc products are safe, free of asbestos, and do not cause cancer.
In 2021, J&J employed a corporate manoeuvre known as the “Texas two-step” to transfer its talc liabilities into a new subsidiary that subsequently filed for bankruptcy. This halted lawsuits against J&J, although J&J itself did not file for bankruptcy. However, this and a subsequent attempt to resolve the litigation failed, as courts ruled that J&J and its subsidiary were not financially distressed and thus ineligible for bankruptcy. On May 1, the company announced plans for a third bankruptcy attempt, contingent on securing enough votes to support a $6.48 billion talc settlement.
Wednesday’s lawsuit seeks a ruling that the Texas two-step transaction was fraudulent, as it was intended solely to protect J&J’s assets from the talc litigation. The lawsuit also claims subsequent transactions, including J&J’s spinoff of its consumer health business Kenvue, were fraudulent, seeking compensatory and punitive damages.
J&J asserts that its planned third bankruptcy will differ because it has the support of over 75% of individuals with talc-related claims. The company has streamlined this proposed bankruptcy by reaching separate settlements with law firms representing mesothelioma patients and U.S. states that alleged J&J failed to warn consumers about the dangers of its talc products.
Litigation against J&J resumed after its second bankruptcy attempt was dismissed. Recent trials have seen J&J ordered to pay $45 million in a mesothelioma case while winning an ovarian cancer case.
