The business is dealing with a deluge of lawsuits alleging that its talc products caused cancer. Although the proposed deal needs to be approved by a bankruptcy court, plaintiffs’ attorneys support it.
In a court battle that has lasted more than ten years, Johnson & Johnson announced on Tuesday that it has reached an agreement to pay $8.9 billion to thousands of people who claimed the company’s talcum powder products were to blame for their development of cancer.
According to a court document from Johnson & Johnson, the $8.9 billion trust was made possible by a subsidiary that declared bankruptcy in order to pay out the planned compensation over a 25-year period.
J&J Filed Bankruptcy in Baby Powder Case Settlement
The arrangement, according to Johnson & Johnson, will settle all current and future claims regarding talc-containing products made by the business, such as baby powder, if a bankruptcy court authorizes it.
The settlement was hailed as a “landmark” and a “significant victory for the tens of thousands of women suffering from gynaecological cancers caused by J.&J.’s talc-based products,” according to a group of attorneys who represent nearly 70,000 petitioners, including families of people who died of ovarian cancer and mesothelioma.
The settlement itself and a fresh bankruptcy petition filed by the Johnson & Johnson subsidiary LTL Management must be approved by the court before the agreement can be considered final.
Moreover, the corporation must persuade enough claimants to agree with the settlement plan.
In an effort to protect itself from the talc litigation, Johnson & Johnson established LTL in 2021.
However, a prior bankruptcy filing by the unit was contested by the plaintiffs and dismissed this year by a U.S. appeals court, which determined that bankruptcy wasn’t the appropriate course of action.
If accepted, the settlement would put an end to a protracted court battle that had a negative impact on Johnson & Johnson’s reputation.
One of the company’s most identifiable brands is its baby powder, but it is not a top seller.
Although they acknowledged that the settlement would apply to all claimants, several lawyers involved in the cases rejected it.
The deal is “bad for victims,” according to Jason Itkin, whose law firm is handling 10,000 cases involving women who believe that Johnson & Johnson’s talc-based powders caused their ovarian cancer. It will also be challenged in court.
According to Mr. Itkin, even if the corporation is successful in filing, it still needs to persuade enough claimants to vote in favor of the settlement plan.
“Even though $8.9 billion sounds like a lot of money, when you spread it out it comes out to not very much at all for the people who suffered,” he said.
$2 billion had been set aside in LTL’s initial bankruptcy filing for payments to plaintiffs. Johnson & Johnson announced it will set aside an additional $6.9 billion in the latest filing to fund the payouts.
The settlement agreement, according to the business, was not an admission of guilt. The plaintiffs’ allegations “are frivolous and lack scientific merit,” according to Erik Haas, the company’s worldwide vice president of litigation, but their resolution would have taken decades and been incredibly expensive.
“Resolving this matter through the proposed reorganization plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner and enables the company to remain focused on our commitment to profoundly and positively impact health for humanity,” Mr. Haas said.
Executives at Johnson & Johnson were aware for many years that their talc products, notably the well-known baby powder they started marketing 129 years ago, had a risk of asbestos exposure.
The corporation faced an onslaught of litigation, as well as governmental investigations and congressional inquiries, in recent years after years of resisting academics and scientists.
There were a variety of verdicts and mistrials in the cases. Johnson & Johnson claimed that while it had won the vast majority of jury trials involving cosmetic powder, it had also suffered egregious defeats in which it had to shell out enormous sums of money to a select group of claimants.
The business announced that it would stop selling its talc-based baby powder in the US in 2020. This year, it intends to discontinue distributing the product internationally and switch to a corn flour alternative.
Also, it intends to separate its consumer health division into Kenvue (Johnson & Johnson’s pharmaceutical and medical divisions will stay put.), a stand-alone firm, which will feature brands including baby powder, Neutrogena, and Tylenol.
In the upcoming weeks, the new bankruptcy approval procedure will go forward, according to attorneys.
In court documents submitted on Tuesday, LTL stated that the only venue in which it could definitively end the talc litigation was bankruptcy, and that it was “essential” that all ongoing talc suits be put on hold in order for the deal to move forward.
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