Johnson & Johnson Seeks $11 Billion Settlement in Talc Lawsuits
Introduction
Johnson & Johnson, the world’s largest maker of health-care products, is proposing an $11 billion settlement in the ongoing litigation over claims that its talc-based baby powder causes ovarian cancer. The amount is $2.1 billion higher than what the company offered last year. The proposed settlement aims to bring an end to thousands of lawsuits and future legal claims.
Settlement Proposal
Johnson & Johnson is urging people who blame the talc-based powder for ovarian cancer to support a third bankruptcy filing for a resolution. They seek a “pre-packaged” bankruptcy, a fast-track process if the proposal gains enough creditor support. For the bankruptcy filing to be approved, 75% of talc plaintiffs must back the move. The new plan entails the company paying $6.48 billion over 25 years to resolve the ovarian cancer claims. However, it’s unclear how much will be allocated for current cases and future claims.
Other Litigation and Settlements
Apart from the ovarian cancer claims, Johnson & Johnson has settled about 95% of cases related to another cancer called mesothelioma. The company has also reached tentative agreements to resolve consumer-protection lawsuits filed by US states. These settlements signify J&J’s willingness to resolve as many pending legal cases as possible to move forward.
Stock Market Reaction
Following the announcement, Johnson & Johnson’s shares rose by 3.5%. However, prior to the proposed settlement, the company’s stock had declined by nearly 12% over the past 12 months. The potential resolution of the talc-related litigation is seen as positive news for the company’s investors.
Legal Opposition
While Johnson & Johnson claims to have worked with the lawyers for an “overwhelming majority” of talc claimants, not all plaintiff’s lawyers agree with the proposed settlement. Some have expressed doubts about the potential bankruptcy case and have called it fraudulent. The agreement’s agreement may face legal challenges on the grounds of bad faith under the US bankruptcy code.
Background and Future Challenges
Johnson & Johnson faces nearly 60,000 lawsuits blaming talc use in baby powder and similar products for various types of cancers. Many of these cases have been consolidated before a federal judge in New Jersey, while others are set for trial in state courts. The recent bankruptcy proposal represents the company’s third attempt to settle these talc-related cases. Previous attempts were not successful due to plaintiffs seeking higher payouts.
Earlier in the year, a Chicago jury ordered Johnson & Johnson and its Kenvue spinoff to pay $45 million in damages to a family who believed the use of baby powder caused cancer. This verdict marked the first involvement of Kenvue, now an independent consumer products division, in the ongoing talc litigation.
The bankruptcy filing, if successful, would be an unprecedented use of Chapter 11, as it focuses on shedding legal claims rather than traditional financial debt. The trustees of the proposed bankruptcy would set the payments for talc claimants, removing jury involvement. The company has been preparing for this third bankruptcy attempt for months and has faced criticism for its bankruptcy maneuvers.
Conclusion
Johnson & Johnson’s proposal for an $11 billion settlement in the talc-related litigation showcases its commitment to resolving the ongoing legal challenges it faces over alleged links between its talc-based baby powder and cancer. The success of the bankruptcy filing would bring closure to numerous pending cases and could potentially set a unique precedent in the bankruptcy process. Nevertheless, the company may still encounter legal obstacles as not all parties involved are in agreement with the proposed settlement.
