News Flash: Talc Texas 2 Step Tanks
Talc Texas 2 Step Update – Mass Tort Special Report from Legalcalls.com by Attorney Jeff Keiser.
We have been talking about Johnson & Johnson’s attempt to skirt liability by shifting liability to a subsidiary that has no connection to the product nor the harm it caused for more than a year now, and we finally have some good news as to whether the so called ‘Texas Two-Step’ passes legal scrutiny.
This week, the 3rd Circuit answered the question clearly and cleanly in the negative, and the consequences are massive.
Massive Consequences
The decision stops J&J from diverting nearly 40,000 lawsuits into its newly created subsidiary, LTL Management LLC, then declaring it bankrupt.
Both sides appear to agree that this strategy was only designed to save the company billions from liability in the talcum powder cases.
The 3rd Circuit ruled that only companies in “financial distress” can declare bankruptcy, noting that J&J had agreed to fund LTL’s liabilities up to $61.5 billion.
The Court also noted that J&J had over $400 billion in equity value, a AAA credit rating and $31 billion in cash and marketable securities.
Good News, but…
While this is good news, it may not be the end of the story.
J&J has vowed to take the matter to the US Supreme Court, and results there may be unpredictable. J&J has promised to appeal, but if they lose or the Court declines the case, 38,000 ovarian cancer cases and over 400 mesothelioma cases could go forward to jury trials, unrestricted by bankruptcy issues.
One thing is for certain, however – this decision will affect much more than this case. 3M tried the same thing in the Combat Arms earplug cases.
Both J&J and 3M stocks have suffered since the ruling, pushing those defendants to the settlement table even faster.
Possible Limbo, but Stay Tuned
If the Supreme Court takes the case, things will likely be in limbo through 2024, but if they reject it, things could happen very quickly on the settlement front.
Neither J&J or 3M want this number of cases going to a jury.
Stay tuned for updates as the Supreme Court makes the next move.
Craig H. Alinder, Vice President