In a high-stakes legal maneuver, a Johnson & Johnson subsidiary has filed for bankruptcy for the third time, aiming to push forward a proposed $10 billion settlement that could resolve more than 62,000 lawsuits. These lawsuits allege that the company’s talc-based baby powder, contaminated with asbestos, caused ovarian cancer and other health issues.
J&J continues to deny the claims, maintaining that its products are safe. The company describes the settlement offer as “fair and equitable,” with over 80% of claimants backing the deal. Despite this, the proposed settlement has sharply divided attorneys representing cancer victims. Detractors, like attorney Andy Birchfield, accuse J&J of exploiting the bankruptcy process to minimize compensation, calling the vote a “fraudulent effort” to sidestep justice for ovarian cancer sufferers.
On the other side, some attorneys, including Allen Smith, have endorsed the deal, believing it offers victims long-overdue compensation. Smith, who represents thousands of claimants, insists it’s time to finalize the settlement and get victims the compensation they deserve.
J&J’s legal strategy, known as the “Texas two-step,” involves creating a subsidiary that absorbs liabilities before filing for bankruptcy, aiming to consolidate all claims into a single settlement without putting the parent company at financial risk. This tactic is meant to protect J&J from future lawsuits, but it has faced significant legal obstacles, including a recent Supreme Court ruling and proposed federal legislation designed to curb such practices.
This latest bankruptcy filing narrows its focus to claims related to gynecological cancers, building upon previous settlements involving mesothelioma cases. If successful, the settlement could span over 25 years, with an $8 billion present value, including more than a billion dollars recently added to bolster the offer.
While J&J pushes forward, legal battles loom, and the future of the settlement remains uncertain.
