A federal judge in Houston has rejected the third attempt by Johnson & Johnson鈥檚 (J&J) subsidiary Red River to settle thousands of lawsuits related to its talc-based products, which have been linked to cancer.
The proposed $9bn settlement was intended to resolve nearly all claims that the company鈥檚 talc products such as baby powder contained asbestos and caused ovarian cancer, but US Bankruptcy Judge Christopher Lopez found several issues with the proposal, ultimately rejecting it.
The settlement 鈥� which was part of J&J鈥檚 bankruptcy strategy 鈥� was designed to address over 90,000 claims against the company, with the vast majority of plaintiffs supporting it. However, Lopez鈥檚 ruling pointed to multiple concerns, including a lack of sufficient support from the plaintiffs themselves. In his decision, Lopez stated that the plan had significant procedural flaws, including voting irregularities and improper legal releases. These would have released third parties such as retailers and J&J鈥檚 spin-off company Kenvue from liability, even though these entities had not filed for bankruptcy. The judge also criticised the short timeframe given for creditors to vote on the proposal, calling it 鈥渦nreasonable鈥�.
鈥淲hile the Court鈥檚 decision is not an easy one, it is the right one,鈥� stated Lopez in a United States Bankruptcy Court document for the Southern District of Texas.
This latest setback marks the third time J&J has attempted to use the bankruptcy process to resolve lawsuits related to its talc products, but each attempt has been rejected by the courts.
In 2021, the company created a subsidiary, LTL Management, to manage the claims, and the subsidiary filed for bankruptcy, hoping to take advantage of bankruptcy court protections to settle the cases more efficiently. However, a federal judge in 2023 rejected that bankruptcy filing, ruling that it was improperly used as a mechanism to shield a solvent company from liability.
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By GlobalDataJ&J then proposed the $8.9bn settlement in early 2023 to resolve the claims. This proposal would have ended both current and future lawsuits related to J&J鈥檚 talc-based products. However, the US Court of Appeals for the Third Circuit rejected the deal, citing concerns about the fairness and adequacy of the settlement terms.
In response to the rejection of this third bankruptcy settlement attempt, J&J announced that it would not appeal the ruling but instead return to the traditional court system to fight the lawsuits individually.
The company expressed its intention to defend itself against the claims, which it insists are 鈥渕eritless鈥� and 鈥減remised on junk science鈥�. J&J has consistently maintained that its talc-based products were safe, free of asbestos, and did not cause cancer.
In 2020, J&J stopped selling talc-based baby powder in the US, switching to a cornstarch-based formula. Despite this, the company still faces a large number of lawsuits related to ovarian cancer and mesothelioma, a rare form of cancer associated with asbestos exposure. Many of the claimants are women who allege that the use of J&J鈥檚 talc products for years led to the development of cancer.
As of now, J&J has set aside approximately $7bn to address the ongoing litigation, but with the rejection of the bankruptcy settlement plan, the company intends to reallocate this amount.
鈥淲e prevailed in 16 of 17 ovarian cases tried in the last 11 years and will devote our efforts to defeating these fake claims,鈥� said Erik Haas, worldwide vice president of litigation for J&J.
