Legislation & Litigation
Our fact-checking process begins with a thorough review of all sources to ensure they are of high quality. We then compare the facts to original medical or scientific reports published by those sources, or validate the facts with reputable news organizations, medical and scientific experts, and other health professionals. Each page includes all sources for full transparency.
Much to the chagrin of plaintiffs’ attorneys across the country, a federal judge in New Jersey approved Johnson & Johnson to move forward with its controversial bankruptcy plan, which includes thousands of talk-related lawsuits.
This strategy will allow Johnson & Johnson to separate its assets from its liabilities and file more than 38,000 claims against a startup company called LTL Management LLC, which has filed for Chapter 11 bankruptcy protection.
The lawsuits center on asbestos-contaminated talc and also include mesothelioma cancer lawsuits. Most are ovarian cancer.
United States Bankruptcy Judge Michael B. Kaplan approved the plan on February 25, dismissing an appeal by a panel of personal injury attorneys who had asked the court to deny the J&J subsidiary’s filing.
“We disagree with the court’s decisions,” said a spokesman for the Mesothelioma Claimants Committee, which was part of the argument against New Jersey’s bankruptcy filing. “We remain concerned that victims were forced into bankruptcy while J&J was prevented from assuring their independent and separate liability for talc products.”
Johnson & Johnson will save billions
Kaplan dismissed the plaintiffs’ argument, allowing J&J to avoid a much more costly and lengthy route of litigating individual claims. He said bankruptcy offered a quicker and fairer alternative.
“This Chapter 11 is used not to avoid liability but to provide accountability and certainty,” Kaplan wrote. “There is nothing to worry about in tort trials migrating out of the tort system and into the bankruptcy system.”
Johnson & Johnson officials testified in court that they first seriously considered this bankruptcy strategy in June 2021, after the US Supreme Court refused to grant a $2.1 billion judgment in Missouri for 20 women who claimed their ovarian cancer was caused by J&J talc products.
Johnson & Johnson is one of the richest companies in America with a market share of over 450 billion US dollars. Jury verdicts and settlements have already cost J&J an estimated $4.5 billion, but the first bankruptcy filing in October halted Talk lawsuits in federal and state courts.
For comparison, newly formed subsidiary LTL Management LLC is valued at $10 billion, along with $10 billion in liabilities, according to court documents.
Johnson & Johnson aims to save billions of dollars over the long term. The stock ended Friday — the day Kaplan announced his decision — up 5%, its biggest one-day gain since spring 2020.
“I am surprised and disappointed that Judge Kaplan is allowing her bankruptcy to proceed,” Daniel Wasserberg, a New York City attorney who specializes in talc litigation, told the Mesothelioma Center on Asbestos.com. “If one of the richest companies in the world is allowed to discharge its liabilities by dumping them in a court-sanctioned dumpster, there can be no justice for the people they killed or their loved ones.”
The recent court ruling was unexpected
Kaplan’s ruling was somewhat surprising given his position as the US bankruptcy judge for the District of New Jersey.
The hearing was originally scheduled for North Carolina, a jurisdiction deemed more conducive to this bankruptcy strategy, which is why LTL Management opened there. However, a federal judge said he was “obligated” to have the case heard in New Jersey, where J&J is headquartered. It’s a district considered less favorable for bankruptcy filings after previous cases.
When the move was announced, attorneys across the country with cases against J&J welcomed the move to New Jersey and expected the bankruptcy protection filing to be denied.
Bankruptcy strategy could be blueprint for other companies
J&J has continued to insist its talc products are safe, but has stopped selling many of them in the US and Canada amid rising infringement lawsuits. J&J attributed the disruption to misinformation.
Details of the bankruptcy filing are still being negotiated. Johnson & Johnson said it has set aside $2 billion to settle talc claims, but that number could change significantly in the coming weeks.
The bankruptcy filing is expected to pressure filers to accept lower settlements than before and avoid excessive payouts.
“It’s very disappointing when huge companies with massive profits can abuse the bankruptcy system to avoid liability for the harm caused to Americans by dangerous products like asbestos,” said Attorney Joe Lahav, local counsel at the Mesothelioma Center. “All this latest decision does is keep corporate fat cats even more money in their pockets and out of the hands of the innocent people they’ve harmed.”
Lawyers are now concerned that this latest ruling could become a blueprint for profitable companies to benefit from Chapter 11 in the future and protect valuable corporate assets.
Access mesothelioma trust funds, grants and compensation
Get financial support