Johnson & Johnson’s bankruptcy claim rejected by federal court as talc lawsuits linger

30 January 2023

Philadelphia's U.S. 3rd Circuit Court of Appeals denied Johnson & Johnson's (J&J) attempt to claim bankruptcy to settle a "multibillion dollar" lawsuit alleging that its talc products lead to cancer, Reuters reports.

Specifically, the federal court rejected J&J's LTL Management unit, it says, because the unit was "created solely to access the bankruptcy system." Reuters reports the unit was up against over 38,000 lawsuits over the company's products, including its popular baby powder.

"Applied here, while LTL faces substantial future talc liability, its funding backstop plainly mitigates any financial distress foreseen on its petition date," the court ruling read.

Reuters reports that J&J tried to use bankruptcy as a way to resolve those "tens of thousands" of lawsuits "more efficiently and fairly," as opposed to taking on each trial separately. But, as the ruling states, the corporation's promised financial support of the unit to guarantee its ability to pay plaintiffs automatically disqualifies claims of "financial distress."

Furthermore, rejection of the company's bankruptcy claim was encouraged by the plaintiffs, who "argued one of the world's largest healthcare companies should not be using bankruptcy to protect itself from lawsuits."

Despite the legal action, the New Jersey-based company asserts that all of its products "are safe" and plans to challenge the court ruling by elevating the lawsuits to bankruptcy courts.

Allison Fennell, spokesperson for J&J said, "As we have said from the beginning of this process, resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders. We continue to stand behind the safety of Johnson’s Baby Powder, which is safe, does not contain asbestos and does not cause cancer.”

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