Navigating the Complexities of Talcum Powder Lawsuits
The realm of product liability has been profoundly affected by ongoing talcum powder lawsuits. Claimants allege a link between talc products and cancer diagnoses, challenging manufacturers over their failure to warn consumers about the health risks associated with their products. These cases have highlighted significant issues within consumer safety and corporate accountability.
Key Points:
Talcum powder lawsuits allege a direct link between talc product use and cancer diagnoses, primarily ovarian and mesothelioma.
Litigation emphasizes manufacturers’ alleged knowledge of asbestos in talcum powder products without providing adequate consumer warnings.
Johnson & Johnson’s legal battles over talc have led to product recalls and billions in settlements.
Eligibility for filing a talcum powder lawsuit involves specific criteria related to product usage and cancer diagnoses.
The value of a talc-cancer lawsuit settlement depends on individual case facts, with outcomes ranging from thousands to millions of dollars.
The lawsuits hinge on the argument that talc, a mineral often located near asbestos deposits, may contain trace amounts of the known carcinogen. Legal actions against companies like Johnson & Johnson have brought to light the potential dangers of talc-containing products, notably baby powders, and the responsibilities of manufacturers to ensure consumer safety.
Legal Implications and Manufacturer Accountability
The discovery of asbestos in talc products has generated a significant product liability issue. Product liability law requires that companies ensure their products are safe for consumers and that they provide clear warnings of any potential risks. The fact that asbestos—a substance with no known safe level of exposure—was found in some cosmetic products has raised serious legal and health concerns. This has led to tens of thousands of lawsuits, with some recent settlements and jury verdicts reaching into the billions of dollars.[^1]
Johnson & Johnson Case: A Legal Precedent
Johnson & Johnson, a household name in baby care products, has been central to the talcum powder controversy. After the U.S. Food and Drug Administration detected asbestos in several products, including J&J’s, the company recalled affected products and eventually discontinued sales of talc-based powders in North America. The case has become a legal touchstone, highlighting the responsibilities of manufacturers to safeguard public health and promptly address potential risks associated with their products.[^2]
Litigation Progress and Plaintiff Eligibility
In the evolving landscape of talcum powder litigation, recent developments have seen J&J propose a multi-billion dollar settlement, which plaintiffs have rejected, suggesting the legal battle is far from over. Those eligible to file lawsuits generally include individuals diagnosed with ovarian cancer or mesothelioma after prolonged use of talc-containing products. Importantly, cornstarch-based powders do not qualify for these claims as they do not contain talc.[^1]
Navigating the Legal Process
Filing a lawsuit requires navigating a complex legal process with specific time constraints. The statute of limitations for these cases varies by state, typically ranging from two to ten years from the diagnosis or discovery of the illness’s potential link to talcum powder. Legal guidance is paramount in determining the appropriate time frame for filing a claim.[^1]
Impact on Claimants and Future Precedents
The implications of talcum powder litigation extend beyond individual claimants, setting precedents that influence product safety standards and corporate transparency. The outcomes of these lawsuits underscore the legal system’s role in consumer protection and holding companies accountable for their products.
The Impact of LTL Management’s Bankruptcy Dismissal on Talcum Powder Litigation
The trajectory of talcum powder litigation has reached a pivotal juncture following the recent developments involving LTL Management LLC, a subsidiary formed by Johnson & Johnson (J&J) ostensibly to address the influx of lawsuits related to talcum powder. The second attempt by LTL to seek bankruptcy protection was dismissed by the Third Circuit Court of Appeals on grounds of insufficient “good faith,” since the entity was deemed not to be in genuine “financial distress,” particularly given its backing by J&J’s up to $61 billion funding agreement.
The subsequent bankruptcy petition by LTL, filed just two hours after further setbacks in the Third Circuit, was notable for its restructured financial support and an unexpected settlement offer to claimants. Despite this move, and a Chapter 11 plan supported by prominent law firms representing a substantial number of claimants, resistance remained from numerous law firms involved in the longstanding litigation, as well as from the U.S. Trustee’s Office, State Attorneys General, and other entities. The core argument against LTL’s actions emphasized that the subsidiary’s financial position had not deteriorated as claimed and that the entire filing appeared to be a tactical move to isolate liabilities.
The Honorable Judge Michael Kaplan of the New Jersey Bankruptcy Court, who had previously allowed LTL’s initial bankruptcy filing to proceed in February 2022, delivered a decisive ruling on July 28, 2023, rejecting LTL’s second bankruptcy petition. Despite acknowledging the potential merits of a Chapter 11 settlement plan for the resolution of claims en masse, Judge Kaplan ruled that LTL had not established the necessary financial distress to justify the filing.
J&J has indicated its intention to appeal Judge Kaplan’s decision, although prospects for a successful reversal appear uncertain given the strictures established by the Third Circuit’s prior ruling. Meanwhile, J&J could explore alternative resolutions, such as engaging directly with opposing law firms to negotiate a settlement, attempting to reach a global settlement despite the complexity of claimant numbers, or reverting to intensive litigation in both MDL and state courts.
The dismissal by Judge Kaplan also carries implications for law firms representing claimants. Under LTL’s proposed plan, compensation details were ambiguous, and the demarcation of claimants as “present” or “future” based on diagnosis dates could affect the timeliness and adequacy of payments. A more transparent and generous settlement, whether through bankruptcy or outside of it, could potentially increase payouts to claimants and provide a clearer pathway for those currently unrepresented.
Continued Developments in Talcum Powder Litigation
Post-dismissal, the focus shifts to accelerating the MDL process and initiating a series of state court trials for mesothelioma and ovarian cancer claims. The successor to Judge Freda Wolfson, Judge Michael Shipp, has encouraged ongoing settlement discussions, echoing Judge Kaplan’s sentiments. The impact of Kaplan’s dismissal has had substantial financial repercussions for J&J, with a significant decline in market capitalization, highlighting the potential benefits of reaching a comprehensive settlement.
Additionally, LTL has sought a direct appeal to the Third Circuit Court of Appeals, although the timeline for this process remains uncertain. Concurrently, J&J aims to challenge expert testimony through Daubert motions, a contention that is yet to be resolved by Judge Shipp.
Looking ahead, Judge Shipp has established deadlines for the submission of expert reports and dispositive motions, setting the stage for a series of crucial hearings that have yet to be scheduled. While exact trial dates remain unconfirmed, the groundwork has been laid for potential bellwether trials in the first half of 2025.
The litigation continues to evolve, with strategic moves on both sides shaping the path forward. The recent rulings and procedural developments suggest a dual approach: a push for advancement in court while simultaneously exploring settlement negotiations for a more favorable resolution for all parties involved.
Talcum Powder Lawsuits: LTL’s Second Bankruptcy Dismissed!
The future of talcum powder litigation is at a crucial turning point. LTL Management LLC (the subsidiary J&J created to limit exposure to talcum powder lawsuits by seeking bankruptcy protection in October 2021) shockingly filed for bankruptcy a second time on April 4, 2023. This new filing came after the Third Circuit Court of Appeals dismissed LTL’s initial filing on January 30, 2023 as lacking the requisite “good faith” because LTL was clearly not in “financial distress.” The primary factor, among others, was that LTL was supported by a J&J-created funding agreement valued at up to $61 billion dollars.
This new filing occurred merely two hours after LTL’s additional efforts in the Third Circuit failed. The new effort was premised on ripping up J&J’s previous funding agreement in favor of lower value back-up funding support and a new surprise settlement proposal for victims allegedly worth $8.9 billion dollars in net present value. This proposal negotiated with and supported by several highly reputable law firms representing a a large number of claimants, became embodied in a Chapter 11 plan and touted as a solution for both victims and LTL alike.
Many law firms, which have collectively fought the talcum powder litigation tooth and nail against J&J in the New Jersey MDL and elsewhere for many years, along with the US Trustee’s Office, State AGs and others, steadfastly opposed this new LTL filing and underlying plan, arguing that J&J and LTL could not runaway from the fundamental point of the Third Circuit’s ruling because (1) LTL is now even further away from “financial distress” alleged in its April 4, 2023 petition; and (2) the filing was otherwise specious or in bad faith because of the intentional “voiding” of the $61 billion funding agreement, and J&J’s continued backing of LTL only for the purpose of siloing liability away from J&J. In other words, financial hardship “by appointment” is not the type of distress envisioned by the drafters of US Bankruptcy Code or established through the courts.
New Jersey Bankruptcy Court Judge Michael Kaplan (who in February 2022 had previously denied the various motions to dismiss LTL’s first bankruptcy filing) heard four days of testimony and contentious arguments from both sides during the final week of June 2023. As promised, Judge Kaplan issued a swift ruling on Friday July 28th, days before his stated August 2nd deadline.
Judge Kaplan, cautiously and with apparent reluctance, dismissed LTL’s April 2023 bankruptcy petition, holding it was not made in “good faith” — because LTL was not in imminent and apparent “financial distress” at the time of the filing. Despite his expressed concern for how talcum powder victims could be compensated en masse going forward without the benefit of a structured Chapter 11 settlement plan and his clear belief that bankruptcy court was the right venue to resolve their claims, he seemingly felt constrained by the guardrails set by the Third Circuit’s opinion and the lack of sufficient evidence of imminent financial distress.
This is a reversal in Kaplan’s approach as he appears to have made his decision despite the stated “keep LTL in bankruptcy” factors strongly affecting him before, during, and after the hearings.
While it is too soon to predict how this fight will proceed , the potential paths forward for talcum powder victims and J&J include the following:
First, J&J said on July 28 that it would promptly appeal to the Third Circuit — but the chances of a reversal of Judge Kaplan seem slim given the Third Circuit’s prior ruling and Kaplan’s adherence to the guardrails set forth in that ruling in granting the dismissal motions.
Such an appeal could theoretically give J&J a chance to keep the existing partial stay of trials and non-bankruptcy appellate proceedings in place pending the Third Circuit’s ruling on J&J’s appeal — though LTL’s opposing law firms will surely oppose any such J&J request.
The potential downside of an appeal for J&J is that it gives the Third Circuit a new opportunity to issue an even harsher opinion against J&J than its original ruling — thereby creating an even narrower path to any successful LTL bankruptcy outcome.
Second, J&J could conceivably reach its hand out to opposing law firms and propose a good faith settlement and plan which provides much higher, and specifically disclosed, compensation to ovarian cancer and mesothelioma victims (versus the non-specific “point system” proposed in LTL’s current Chapter 11 plan).
The goal would be to persuade present objectors to join in a completely consensual plan, file LTL in bankruptcy one last time, preempt all motions to dismiss because of enough money on the table for all, and allow all claimants’ representatives and the US Trustee to move forward with a completely united front before Kaplan.
This may not be feasible given the extreme rancor exhibited by all sides in the courtroom in recent hearings, but the victory secured in front of Kaplan by the tacl committee, UST and other stakeholders might be enough to give them cushion and comfort to agree — if the compensation is raised sufficiently for all. The second bankruptcy fight was likely necessitated for reasons going beyond the LTL case and outside Kaplan’s courtroom, and an LTL initial win would have heightened the existential risk that other litigation-entangled companies would try to copycat J&J and use the same tactic to gain a litigation advantage in bankruptcy court (as 3M’s Aearo subsidiary tried, but failed, to do in July 2022).
Given the stature of the law firms negotiating and supporting LTL’s settlement and plan, there is certainly a possibility that negotiations with LTL’s opponents could continue and result in a winning settlement for all stakeholders and claimants.
Third, J&J could consider and pursue inventory settlements outside bankruptcy with the lead law firms it fears most in the MDL and state court litigation (which will begin to accelerate again in the wake of Kaplan’s ruling), as well as with the law firms which supported the present LTL plan. J&J has already disclosed (during the LTL bankruptcy) that it settled almost 6000 cases with Mark Lanier (and certain other smaller firms) in 2021. Such a divide and conquer strategy could prove perilous for claimants not presently represented by stakeholder firms and lead litigation counsel.
Fourth, J&J could consider a global settlement of all claims but given the uncertainty of the true number of claimants, and the hostility engendered by the second LTL filing, that would also likely be a hard lift.
Fifth and finally, J&J could simply decide that its LTL Texas Two-Step strategy has failed and just revert to defending itself in scorched earth litigation in the MDL and state court with all law firms. This would of course be the least satisfactory outcome for all sides, with few benefits besides an occasional trial victory for some victims, but it cannot be discounted.
If the litigation ends up yielding new large-dollar verdicts which survive appeals, and many new claims, J&J might even try a third LTL bankruptcy down the road and try to persuade Kaplan that now LTL is in imminent and apparent financial distress. The law firms opposing the second LTL bankruptcy raised that concern with Kaplan and asked him to enjoin such a third future filing but he declined to do so at the August 2 hearing in which the issue was raised.
How can law firms potentially benefit from Kaplan’s dismissal? Under the proposed plan, LTL would have paid ovarian cancer and mesothelioma claimants a presently unspecified amount (based on a complicated points system). Moreover, the plan proposed a demarcation line wherein anyone diagnosed after June 1, 2023 would be a “future claimant,” not a “present” claimant — and thus subject to a potentially lengthier timeline to payment. That would obviously be an unjustifiable negative to that subset of claimants. These factors raised the risks for law firms’ present talc clients and likely hindered the pursuit of new clients.
A new bankruptcy settlement, supported by all stakeholders, would likely increase and make concrete and increase the amounts payable to present clients, while eliminating the capricious June 1, 2023, line drawn between present and future claimants.
An inventory or global settlement outside bankruptcy would also likely benefit many firms’ existing and new clients.
Both scenarios warrant a re-examination of, and approach to, the still-viable pool of unrepresented clients.
Watch this space for discussion of future developments.
—-
Citation – to be edited according to lawsuits.org cadence before posting
Here is the quote shown on page 52 of the 2021 Syngenta Annual Report — with the paragraphs preceding it for context.
Illinois State Court Claims. In September 2017, a complaint was filed in St. Clair County, Illinois state court on behalf of plaintiffs Thomas and Diana Hoffmann. On October 6, 2017 an amended complaint was filed in the same court on behalf of 12 plaintiffs, including the Hoffmanns. Syngenta’s Motion to Dismiss was denied in July 2018. Syngenta filed its answer to the amended complaint in October 2018. On July 16, 2020, the state court dismissed without prejudice the claims brought by four plaintiffs pursuant to a motion for withdrawal filed by those plaintiffs. On April 27, 2021, all of the claims besides the Illinois Consumer Fraud & Deceptive Business Practices Act and corresponding Loss of Consortium claims were voluntarily dismissed by plaintiffs. Also, in 2021, additional cases were filed in state court in Cook, McLean, and Vermillion Counties. The McLean county case was voluntarily dismissed in November 2021, and the other pending cases remain at the pleading stage, with fully briefed motions to dismiss pending.
In addition to the above, lawsuits have been filed in the state courts of California, Florida, Pennsylvania and Washington.
Settlement. On June 1, 2021, Syngenta and a third party co-defendant reached a settlement agreement with paraquat claimants represented by the lead counsel in the Hoffmann cases that were set for trial in St. Clair County, Illinois, and in most of the then-pending California state court cases. In exchange for (and contingent upon) dismissal of all pending cases represented by the lead counsel and a broad release from the covered claimants, Syngenta agreed to pay $187.5 million. Syngenta paid its share into the Qualified Settlement Escrow Fund on July 21, 2021 for purposes of third party verification and allocation among the claimants. The settlement expense is reported within Other general and administrative in the income statement.
Johnson & Johnson Proposes $8.9 Billion To Settle Talcum Powder Lawsuits
On April 4, 2023, Johnson & Johnson announced that it has earmarked $8.9 billion as part of a plan to cover settlements to tens of thousands of plaintiffs who allege the company’s talcum powder products caused cancer. This amount is more than four times the $2 billion the company had originally set aside in October 2021.
The revised talc settlement amount is part of a proposed reorganization plan to resolve both current and future claims relating to the company’s talc-based products. The finalization of the plan rests on two conditions. First, the Court must accept the settlement as well as a bankruptcy refiling by a J&J subsidiary, LTL Management. Second, the settlement must have the approval of at least 75% of the claimants, as specified in section 524(g) of the U.S. Bankruptcy Code.
According to Mikal Watts, one of the lawyers for the plaintiffs, enough claimants now support the revised talc settlement to induce the Court’s approval.
If the deal goes through, plaintiffs diagnosed with cancer before April 1, 2023, would receive their settlement amounts within a year, while payouts to future plaintiffs would be payable over the next 25 years.
LTL Management and the Texas two-step
In October 2021, J&J created LTL Management in an attempt to reduce its legal exposure in a maneuver known as a Texas two-step, where a solvent company transfers its tort liabilities to a newly created corporate entity that subsequently declares bankruptcy.
After LTL Management filed for a Chapter 11 bankruptcy two days after its formation, plaintiffs’ lawyers challenged the effort as an abuse of the bankruptcy system. They argued the filing was not in good faith, as J&J’s capitalization of more than $400 billion did not indicate insolvency, a necessity for establishing a bankruptcy claim. In response, J&J claimed the bankruptcy filing would be a more equitable resolution because it would help to ensure fairer settlement payouts.
In January 2023, a U.S. Court of Appeals dismissed the bankruptcy filing on grounds of illegitimacy. The Court’s rejection of J&J’s maneuver effectively prompted the company to revise its settlement proposal.
Potential health concerns surrounding talc products
Talc is a naturally occurring mineral and an ingredient in baby powder, a product closely associated with J&J. Though talc itself is harmless, it commonly occurs in the earth in close proximity to asbestos, a cancer-causing agent. Because of the proximity, asbestos can be in talc products. If applied to the genital region or inhaled, contaminated talc could potentially cause ovarian cancer or mesothelioma.
Concerns about potential asbestos contamination in talc have existed since the 1970s, and the claimants in the J&J talcum powder lawsuit allege the company has known about the connection for decades.
In October 2019, the U.S. Food and Drug Administration (FDA) completed a study in which it detected traces of asbestos in several talc products and worked with manufacturers, including J&J, to issue recalls.
J&J ceased sales of its talc-based baby powder in the North American market in 2020 and discontinued it worldwide in 2023. The company attributes its decision to “misinformation” surrounding the product and maintains that its talc-containing offerings are safe to use.
