J&J Tries Again
Talcum Powder Update: Mass Tort Special Report from Legalcalls.com by Attorney Jeff Keiser.
Talcum Powder Newsflash
There has been an upswing in news and developments in the talcum powder litigation, and we hope this newsflash will serve to update you on what is going on, and what it means for the case.
Earlier this year, you will likely remember Johnson & Johnson’s attempts to shift liability to a subsidiary in bankruptcy was soundly rejected by the 3rd Circuit, but what you may not know is that J&J tried to do this a second time, and just as cleanly, the courts rejected the move.
Just this week, Chief Judge Michael Kaplan of the U.S. Bankruptcy Court in New Jersey killed J&J’s hopes of bankruptcy, again.
No Flames, No Fire
In essence, Judge Kaplan found that J&J was not facing any imminent financial distress, and for that reason, bankruptcy was inappropriate.
The court “smell[ed] smoke, but [did] not see the fire.” Following the dismissal, J&J strongly disagreed.
Erik Haas, J&J’s worldwide vice president of litigation, noted “The Bankruptcy Code does not require a business to be engulfed in ‘flames’ to seek a reorganization supported by the vast majority of claimants.”
Try Try Again?
Is that the end of the story? Absolutely not.
J&J, apparently not satisfied with Judge Kaplan’s dismissal, has vowed to continue the fight, all the way to the Supreme Court if necessary. Their press release response essentially declared the judge to be wrong on the law, and that the standards imposed are nowhere to be found in the Bankruptcy Code.
Further, they believe plaintiffs are relying on “junk science” and that their internal studies over the decades only show that talc products are safe. To that end, last month, J&J filed suit against scientists that published papers that essentially paved the way to the litigation.
However, the litigation stalled due to the bankruptcy proceedings. More than 38,000 lawsuits have been filed with only minimal progress, at least on an individual basis.
However, Judge Kaplan allowed one bellwether trial to proceed, and it resulted in an $18.8 million verdict for the plaintiff.
J&J has argued that the bankruptcy settlement offers a fairer and faster resolution for cancer claimants than litigation in courts. Further, J&J noted that the costs of its talc-related verdicts, settlements and legal fees have topped $4.5 billion.
$8.9bn In Question
These developments put in question the $8.9 billion settlement on the table.
J&J still believes its proposed settlement is the “most equitable solution” for all talc claimants. Litigating the cases individually would “take decades and waste billions of dollars, mainly spent on lawyers’ fees,” the company said in a statement.
At a recent hearing, plaintiffs and the U.S. Department of Justice’s bankruptcy watchdog asked Judge Kaplan to block the company from filing for bankruptcy a third time for at least 180 days.
Driving Stocks Down
Even worse, if the conservative Supreme Court is the ultimate arbiter of this issue, plaintiffs could lose entirely.
Some lawyers believe that J&J may now start looking at settling individual cases, while others think a global settlement is still the most likely resolution.
At the moment, J&J’s focus is likely the price of their stock, which lost more than 4% the day after the bankruptcy was rejected.
What Happens Next?
What happens next? The answer to that question is the same as always – we wait. We’re looking to the Supreme Court to decide whether they’ll hear the case or not.
This will take some time. No matter how these appeals play out, these cases have value, and we expect J&J to eventually pay.
Despite their claims that they need to proceed in bankruptcy, J&J is worth billions, and no legal technique can mask that fact. As always, we’ll keep you posted on any developments.
Craig H. Alinder, Vice President