Cancer victims urge US judge to dismiss J&J talc unit’s second bankruptcy

By Dietrich Knauth

(Reuters) – Cancer victims on Monday urged a U.S. judge to dismiss a Johnson & Johnson (NYSE:) subsidiary’s second bankruptcy filing, saying that the company is abusing the bankruptcy system in its renewed attempt to resolve tens of thousands of lawsuits alleging that J&J’s baby powder and other talc products caused cancer.

The J&J subsidiary, LTL Management, filed this month for bankruptcy a second time, seeking to settle all current and future talc claims for a proposed $8.9 billion. LTL’s first bankruptcy was dismissed after a federal appeals court ruled the company was not in financial distress and therefore not eligible for bankruptcy.

Plaintiffs have filed more than 38,000 lawsuits that have been consolidated in federal court in New Jersey alleging that J&J talc products sometimes contained asbestos and have caused their ovarian cancer or mesothelioma.

They portray J&J’s actions as an abuse of the bankruptcy system by a multinational conglomerate valued at more than $400 billion and in little danger of running out of money to pay cancer victims.

J&J and LTL have argued that bankruptcy delivers settlement payouts more fairly, efficiently and equitably than a “lottery” offered by trial courts, where some litigants get large awards and others nothing.

J&J has said its talc is safe, asbestos-free and does not cause cancer.

J&J said its new settlement offer has broad support from cancer victims, a claim disputed by lawyers who objected to the deal. J&J has not estimated the total number of talc claims it faces, and lawyers opposed to the deal said J&J’s settlement support number is inflated by claimants who have never filed lawsuits against the company and whose claims may not be fully vetted.

The healthcare conglomerate has not filed for bankruptcy itself. Instead, it divided its consumer business in two in October 2021 and offloaded the talc lawsuits onto the newly created subsidiary LTL. LTL filed for bankruptcy days after it was created, putting a halt to the lawsuits.

U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey, who has presided over both of the company’s bankruptcy cases, ruled Thursday that the cases should remain paused for at least 60 more days.

LTL’s bankruptcy also prevented new lawsuits from being filed, a prohibition that Kaplan partially lifted on Thursday. Kaplan allowed new cases to be filed against J&J, but he ruled that no case could proceed to trial for the time being.

On Thursday, Kaplan said he “had more questions than answers” in early stages of the new bankruptcy, and that LTL has an “uphill battle” on its second attempt to resolve the lawsuits in bankruptcy court.

At the start of LTL’s second bankruptcy, Kaplan rejected some plaintiffs’ demand that he immediately dismiss the new bankruptcy case, but he said he would fully consider a more formal request made with more evidence in support of it.