In a pivotal decision on Monday, a federal bankruptcy judge in Houston dismissed Johnson & Johnson’s $9 billion settlement offer aimed at resolving numerous lawsuits related to claims that its talcum powder products led to cancer. This proposed settlement sought to address both existing and potential claims alleging that asbestos in the company’s talc products was cancer-causing. Similar to previous settlement attempts in 2021 and 2023, this deal relied on a component of the bankruptcy system to reach a resolution.
Johnson & Johnson has consistently maintained that its products do not contain asbestos, and no definitive connection between its talc products and cancer has been established, as noted by Judge Christopher Lopez in his ruling. Despite these denials, the company ceased global sales of its talc-based baby powder in recent years.
Currently, there are more than 90,000 claims pending against Johnson & Johnson and associated parties, which is far too many for the courts to handle on a case-by-case basis.
The settlement, negotiated by the company and attorneys for the claimants, faced opposition from a Department of Justice bankruptcy trustee and other plaintiffs’ attorneys, according to the judge. In a statement released on Monday, Johnson & Johnson expressed their disappointment, saying, “The court has regrettably allowed a few law firms with financial conflicts, who admit they haven’t secured compensation for their clients in a decade of litigation, to undermine the overwhelming interest of the claimants.”
Opting not to pursue a lengthy appeal, the company declared its intention to return to the tort system to “litigate and dismantle these unfounded talc claims.” It also mentioned that it would release approximately $7 billion allocated for resolving the bankruptcy.
Johnson & Johnson, a conglomerate known for pharmaceuticals and consumer products, has long defended the safety of its baby powder. Internal documents revealed internal concerns about potential asbestos contamination, a carcinogen, in the talc.
Critics accuse the company of exploiting chapter protections in the bankruptcy court. In 2021, Johnson & Johnson spun off a subsidiary, LTL Management, transferring the talc claims there. The subsidiary filed for bankruptcy the following day.
At the time, Johnson & Johnson stated that the New Jersey bankruptcy filing aimed to resolve lawsuits fairly for all involved, with the company committing to cover any compensations determined by the bankruptcy court against LTL.
Plaintiffs’ attorneys criticized this move, labeling the creation of LTL and its swift bankruptcy as a “Texas two-step,” an attempt to use an insolvent entity to shield a healthy company. In January 2023, a federal judge dismissed LTL’s bankruptcy filing.
Just three months later, Johnson & Johnson announced an agreement to pay $8.9 billion over 25 years to resolve the ongoing litigation, offering some closure to a decade-long legal battle. Lawyers representing the plaintiffs hailed this as a “considerable triumph for the tens of thousands of women with gynecological cancers linked to J&J’s talc-based products.”
Despite two rejections from the U.S. Court of Appeals for the Third Circuit, Johnson & Johnson brought the settlement proposal to Texas, only to face another rejection from Judge Lopez. The judge determined that the plaintiffs’ lawyers hadn’t adequately secured enough claimants’ consent and highlighted issues such as short voting durations for numerous creditors.
“The court’s decision wasn’t made lightly,” Judge Lopez stated, “but it is the right decision.”
