A group of cancer victims recently sued Johnson & Johnson, accusing the healthcare company of committing fraud through repeated and continued efforts to use a shell company’s bankruptcy to resolve tens of thousands of lawsuits alleging its talc products contained asbestos and caused cancer.
Five plaintiffs who seek to represent over 50,000 people who have sued J&J over its talc products filed the proposed class action in New Jersey federal court. They allege that J&J’s bankruptcy strategy put billions of dollars out of the reach of plaintiffs in an attempt to “hinder, delay, and defraud these women and prevent them from ever having their day in court.”
“Johnson & Johnson is playing a dark game of chess with this country’s financial and judicial systems,” said Mike Papantonio, an attorney for the cancer plaintiffs. J&J’s worldwide vice president of litigation, Erik Haas, said the lawsuit was a “Hail Mary pass” by plaintiffs’ lawyers who don’t want their clients to vote on the company’s latest proposed bankruptcy settlement.
“Why are they so desperate to stop the vote?” Haas said. “Our focus has been and will remain reaching a full, fair and final resolution of this litigation, and allowing the claimants to speak for themselves.”
Most of the talc lawsuits have been brought by women with ovarian cancer, while other cases involve people with mesothelioma, a deadly cancer linked to asbestos exposure. J&J has said that its baby powder and other talc products are safe, do not contain asbestos, and do not cause cancer.
J&J first used a corporate manoeuvre called the “Texas two-step” to place its talc liabilities into a new subsidiary that then filed for bankruptcy in 2021. The bankruptcy stopped the lawsuits from moving ahead against J&J, although it did not file for bankruptcy itself.
That and a second similar attempt to resolve the litigation failed as courts ruled that J&J and its subsidiary was not in financial distress so not eligible for bankruptcy. The company said on May 1 that it plans to pursue a third bankruptcy once it gets enough votes to support a $6.48 billion talc settlement. The recent lawsuit seeks a ruling that the Texas two-step transaction was fraudulent, because it was undertaken solely to shelter J&J’s assets from the talc litigation.
