With 25,000 unresolved lawsuits alleging its talcum products cause cancer, Johnson & Johnson is considering a legal move sometimes referred to as Texas in two stages.
A U.S. judge on Thursday refused to block the decision, giving the pharmaceutical giant the chance to start a new business to absorb the liability associated with the litigation, and then seek bankruptcy protection.
U.S. bankruptcy judge Laurie Selber Silverstein has rejected plaintiffs’ request for a restraining order against J&J to prevent the company from employing the tactic, first used by companies decades ago to mitigate associated costs asbestos-related claims.
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Last month, citing sources close to the talks, Reuters reported that J&J was considering a move. The company made a statement on Friday.
“Johnson & Johnson Consumer Inc. has not decided on any particular action in this litigation other than to continue to defend the safety of talc and to litigate these cases in the tort system, as evidenced by the ongoing lawsuits,” J&J wrote in an email.
Judge Silverstein ruled that it would be inappropriate to rule on a hypothetical restructuring by J&J that would separate its talc responsibilities.
“Make no mistake: if Johnson & Johnson thinks they can dance away from their responsibility to ovarian cancer victims – many of whom are African-American women – by doing a two-step Texas, it is a mistake, “senior counsel Andy Birchfield said in an emailed statement.
A Missouri court will then consider the plaintiffs’ emergency request to prevent bankruptcy.
Dianne Sullivan, an attorney representing J&J, said the following: “The court rightly denied the plaintiffs’ request to prevent J&J from engaging in legitimate business transactions if it so chooses,” wrote Sullivan. “This was yet another frivolous attempt by the plaintiffs’ emergency lawyers to try to coerce J&J to settle their case as J&J continues to defend the safety of its products in court.”
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The bankruptcy case Silverstein is handling involves Imerys Talc America, a former supplier to J&J who has been crippled by its own litigation and has filed a Chapter 11 claim. The company is also fighting J&J for associated legal fees.
Earlier this year, in an annual filing with the Securities and Exchange Commission, J&J estimated its talc liabilities to be around $ 3.9 billion.
After years of defending its baby powder and other talc-based products, J&J’s legal efforts suffered a major setback last month when the United States Supreme Court dismissed the company’s appeal against a verdict. Missouri $ 2.11 billion for women who developed ovarian cancer.
In that case, J&J argued that a trial combining the claims of 22 cancer patients from 12 states was unfair. The company said the process added undue emotional weight to the proceedings and took away its right to deal with complaints on a case-by-case basis.
J&J has also been in court for years for opioids. In June, the company signed a $ 230 million settlement to withdraw as a New York defendant from an opioid lawsuit. The company stopped manufacturing and selling opioids last year.