A US Court of Appeals has rejected a controversial strategy by Johnson & Johnson to use a bankruptcy as a way to deal with billions of dollars worth of claims filed against the company by cancer victims, who allege that J&J’s talcum powder products (e.g., baby powder) cause cancer.
As a result of the decision, thousands of individual and class action lawsuits against Johnson & Johnson, which had been brought to a standstill as a result of the bankruptcy, may be allowed to move forward so that cancer victims or their surviving family members can have their day in court.
CBC News has interviewed Siskinds’ partner Jill McCartney about the news. See the story here.
Lawsuits allege that Johnson & Johnson knew for decades that talc was linked to cancer
For over a decade Johnson & Johnson has been the subject of lawsuits accusing the company of knowing that their talcum powder-based hygiene products, including their best-selling Johnson’s Baby Powder, have been linked to cancers in women, particularly ovarian cancer. Courts documents in the lawsuits show that since the 1970s, key company figures knew that J&J’s talcum products tested positive for asbestos – a substance classified as among the most dangerous carcinogens to humans by the International Agency for Research on Cancer (IARC).
Though J&J continues to publicly assert that its “Baby Powder is safe, does not contain asbestos, and does not cause cancer,” in 2010 the IARC also classified so-called “asbestos-free” talc as “possibly carcinogenic” when applied topically to the perineum of a woman. In 2022, after already stopping sales in America, J&J discontinued talcum powder products globally (Read my prior blog for more info).
J&J tried controversial “Texas two-step” to force talc claims into a bankruptcy process
In October 2021, facing $3.5 billion USD in verdicts and settlements and more than 38,000 cancer cases regarding its talc products, J&J used a rule under Texas law to split its consumer products subsidiary in two, and it immediately assigned all liabilities for its talc products to its newly created “LTL Management” subsidiary and filed for bankruptcy relief for LTL. J&J’s stated goal for using what’s become known as the “Texas two-step” maneuver was to isolate the talc liabilities in LTL so that its entire consumer products enterprise would not be subject to bankruptcy proceedings, and it described the bankruptcy as a way of “equitably and permanently” resolving all talc claims.
The bankruptcy led to “stays” of litigation across North America, pausing all pending talc lawsuits against J&J. Cancer victims then appealed to have the bankruptcy dismissed as filed in bad faith.
On January 30, 2023, a panel of the US 3rd Circuit Court of Appeals unanimously dismissed LTL’s bankruptcy petition. The Court held that J&J’s purported “good intentions” to protect the J&J brand or comprehensively resolve all claims were not sufficient grounds for filing a bankruptcy petition. Only a company in financial distress could do so, and LTL was not in legitimate distress.
The decision may open the door for the stays of proceedings throughout North America to be lifted and for cancer victims to continue to pursue their claims against Johnson & Johnson in court.
Siskinds is pursuing compensation for Canadians who used J&J’s talcum products
Siskinds LLP is representing Canadian women (or their estates) who have been diagnosed with ovarian cancer, fallopian tube cancer, primary peritoneal cancer, or mesothelioma after regular use of J&J talcum powder products. If you have been impacted, email [email protected] or visit our website for more info.