Consumer-products giant Johnson & Johnson is trying for a third time to bankrupt its talc-powder subsidiary to settle mass-tort lawsuits. In announcing the Chapter 11 filing, J&J issued a detailed and urgent-sounding press release designed to convince the court of public opinion. It remains to be seen whether its legal or comms approach will work.

Over the past 15 years or so, J&J has been hit with billions of dollars in verdicts stemming from lawsuits claiming its talc-based powder causes cancer. The company still faces suits from 62,000 claimants, many of whom feel the settlement amounts J&J has offered have been too stingy. Then in 2021, it formed a subsidiary to stuff the talc liabilities into, and immediately put it in bankruptcy. But the courts twice blocked that tack, finding the new unit wasn’t really in distress.

J&J is trying again. On Sept. 20, its subsidiary filed for bankruptcy protection in Houston. It filed a so-called prepackaged bankruptcy, or prepack, declaring that 83 percent of current claimants support its plan (bankruptcy rules require buy-in from 75 percent). The proposal includes a settlement amount raised to about $8 billion.

Ovarian Cancer

J&J said the deal would resolve nearly all the lawsuits alleging ovarian cancer. Most of another group of suits alleging mesothelioma have been resolved outside court.

“The overwhelming support for the plan demonstrates the company’s extensive, good-faith efforts to resolve this litigation for the benefit of all stakeholders,” J&J Worldwide Vice President of Litigation Erik Haas said in the statement.

That sounds almost desperate. The statement insists “the plan is in the best interests of the ovarian claimants” and “the plan enables a full and final resolution of the company’s ovarian talc litigation.” J&J asserts that it represents a better deal than the plaintiffs would get by going to trial and that it should be approved because it was devised in negotiation with their lawyers.

Experiencing Pushback

Despite the company’s efforts, it’s already experiencing pushback. At the first-day hearing on Monday, lawyers for the cancer victims urged U.S. Bankruptcy Judge Chris Lopez to throw the case out or send it to J&J’s home state of New Jersey, where the earlier efforts were eventually heard. Lopez did halt all litigation until Oct. 11 while he mulls that over.

Reuters called the hearing “contentious.” This latest effort is “doomed to fail,” David Molton, a lawyer representing law firms opposed to the deal, said during the hearing, according to Reuters. “It’s deja vu all over again for many of us.” Molton pushed back on the notion that the filing was a prepack, arguing J&J’s voting shouldn’t be trusted.

So, this saga will go on. In its statement, J&J did stick with one theme it’s stressed all along — that its talc-based powder doesn’t cause cancer (despite that it’s since pulled the product from the shelves). “The company reiterates that none of the talc-related claims against it have merit,” it writes.

Photo Credit: Nonowon/Shutterstock

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