Court Decision Marks Third Failed Bankruptcy Strategy for Healthcare Giant
A US bankruptcy judge on Monday rejected Johnson & Johnson’s $10 billion proposal to end tens of thousands of lawsuits alleging its baby powder and other talc products cause ovarian cancer. US bankruptcy judge Christopher Lopez in Houston ruled that the company did not belong in bankruptcy, which significantly affected J&J’s efforts to resolve approximately 60,000 claims through a subsidiary bankruptcy filing. This marks the third time the company’s bankruptcy strategy has failed in court, potentially forcing J&J to face individual trials.
5 Key Points
- US Bankruptcy Judge Christopher Lopez rejected J&J’s $10 billion settlement proposal on Monday, March 31
- This is the third time J&J’s bankruptcy strategy to resolve talc lawsuits has failed in court
- The judge found the proposed settlement lacked sufficient support from cancer plaintiffs
- J&J faces over 60,000 lawsuits alleging its talc products caused ovarian cancer
- The company stopped selling talc-based baby powder in the US in 2020, switching to cornstarch
How Did the Judge Explain His Decision to Reject the Settlement?
Judge Christopher Lopez delivered a definitive ruling against Johnson & Johnson’s bankruptcy strategy on Monday, emphasizing that while his decision was difficult, it was correct. “While the Court’s decision is not an easy one, it is the right one,” Lopez wrote in his ruling. The judge found fundamental flaws in J&J’s approach, particularly regarding the support from cancer plaintiffs and the scope of legal releases.
The court determined that J&J’s proposed settlement did not secure adequate backing from women who alleged the company’s products caused their cancer. Additionally, Lopez criticized the settlement for overreaching in its attempt to release legal claims against entities that had never filed for bankruptcy, including retailers that sold J&J products and Kenvue, a consumer health business that J&J spun off in 2023.
Judge Lopez also expressed significant concerns about the voting process J&J had conducted to demonstrate claimant support. Lopez criticized the votes J&J collected from plaintiffs’ attorneys, stating serious flaws in votes for and against the plan. While the company claimed to have collected 90,000 votes showing 83% support from plaintiffs, the judge determined that “at least half should not be counted.” This finding undermined J&J’s central argument that the settlement deserved approval based on majority support from claimants.
The court’s ruling represents a fundamental rejection of J&J’s strategy of using bankruptcy proceedings to resolve mass tort litigation. Lopez clearly stated that the company simply did not belong in bankruptcy court.
What Claims Do the Lawsuits Against Johnson & Johnson Allege?
The litigation against Johnson & Johnson involves approximately 60,000 claimants who allege the company’s iconic baby powder and other talc products contained asbestos and caused ovarian cancer. These lawsuits represent one of the largest mass tort cases in American history, with plaintiffs claiming J&J knew about contamination risks but failed to warn consumers.
J&J has consistently maintained that its products are safe and do not cause cancer. The company, which began selling Johnson’s baby powder in 1894, insists its products do not contain asbestos and are not carcinogenic. J&J stopped selling talc-based baby powder in the US in 2020, switching to a cornstarch product instead. This product change came amid growing litigation and public concerns, though the company framed it as a business decision rather than an admission of product safety issues.
Before this third bankruptcy attempt focused on ovarian cancer claims, J&J had separately settled lawsuits alleging its talc products caused mesothelioma, a rare form of cancer associated with asbestos exposure. The current litigation explicitly addresses claims that the talc products caused ovarian and other gynecological cancers, representing a much larger pool of potential claimants.
The claims span decades of product use, with many plaintiffs alleging prolonged exposure to talc products containing trace amounts of asbestos led to their cancer diagnoses. Scientific studies examining the link between talcum powder and ovarian cancer have shown mixed results, creating a complex scientific backdrop for these legal proceedings.
What Would the Rejected Settlement Have Provided to Claimants?
The proposed $10 billion settlement would have established a structured compensation system for current and future claimants alleging J&J’s talc products caused their ovarian cancer. Under the settlement terms, J&J had estimated that ovarian cancer patients would receive between $75,000 and $150,000. However, exact amounts would have varied based on the severity of a patient’s injury and the number of current and future claims ultimately covered by the settlement.
The settlement would have created a streamlined claims process, potentially delivering compensation faster than individual trials. However, critics argued the proposed amounts significantly undervalued plaintiffs’ claims compared to potential jury verdicts, which have previously reached millions or even billions of dollars in some talc cases.
A key feature of J&J’s bankruptcy strategy was that the settlement would have permanently ended existing lawsuits while preventing similar lawsuits from being filed in the future. This “global resolution” approach aimed to provide J&J with certainty regarding its total liability, but opponents contended it unfairly limited the rights of cancer victims to seek full compensation through the traditional court system.
The settlement structure would have included detailed criteria for evaluating claims, with factors such as duration of product use, age at diagnosis, and specific cancer type affecting payout amounts. Patient advocates criticized this approach as too formulaic, failing to account for individual suffering and circumstances.
What Happens Next for the Thousands of Talc Lawsuits?
With the bankruptcy settlement rejected, the litigation returns to the traditional court system, where individual cases will proceed to trial. Attorneys representing plaintiffs opposed to the bankruptcy settlement expressed satisfaction with this development. Andy Birchfield, an attorney representing plaintiffs who opposed the bankruptcy settlement, characterized J&J’s bankruptcy strategy as “nothing more than a bad-faith maneuver to avoid full accountability.” He added, “With this ruling, we are now moving forward without delay to trial, where our clients will finally have the chance to present their cases before a jury and obtain the justice they deserve.”
The rejection of J&J’s bankruptcy strategy means the company now faces the prospect of defending thousands of individual lawsuits across multiple jurisdictions. This creates significant uncertainty regarding J&J’s total potential liability, as jury verdicts in talc cases have historically varied widely, with some reaching substantial sums.
Legal experts note that both sides now face a complex landscape of multi-district litigation coordination, potential bellwether trials, and renewed settlement discussions outside the bankruptcy framework. The next phase will likely involve case consolidation for pretrial proceedings, with initial trials setting important precedents for future cases.
For plaintiffs, many of whom have waited years for resolution, the court’s decision represents both an opportunity and a challenge. While they can now pursue full compensation through jury trials, they also face potentially lengthy litigation processes with uncertain outcomes. Cancer victims and their families must now navigate a legal system that may take years to deliver final resolutions in their cases.
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