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Home - California Personal Injury Blog - U.S. Appeals Court Rejects J&J’s Bankruptcy Strategy for Talcum Powder Lawsuits

U.S. Appeals Court Rejects J&J’s Bankruptcy Strategy for Talcum Powder Lawsuits

Johnson & Johnson talcum powder

A U.S. Appeals Court shot down Johnson & Johnson’s attempt to offload tens of thousands of talcum powder lawsuits alleging that its talc products caused cancer.

Johnson & Johnson was hoping to avoid potential liability, but the strategy was rejected by the courts in a landmark decision.

According to a Reuters news report, the ruling marked the first major rejection of an emerging legal strategy that had the potential to upend U.S. corporate liability law.

The Texas Two-Step Rejected in Talcum Powder Lawsuits

J&J is one of four major corporations that have filed the Texas two-step bankruptcy to avoid massive legal liability. The tactic essentially involves creating a subsidiary to absorb the liabilities and file for Chapter 11 bankruptcy protection right away.

The court ruled that J&J improperly placed its subsidiary into bankruptcy despite not facing financial distress. The corporation’s two-step strategy sought to stop more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talcum powder products caused cancer. This appellate court ruling is significant because it resuscitates those lawsuits.

Last year, Reuters reported about the secret planning of Texas two-steps by J&J and other major corporations in a series of articles looking into these companies’ attempts to evade lawsuits through bankruptcies. Monday’s decision by the U.S. Third Circuit Court of Appeals in Philadelphia dismissed the bankruptcy filed by the subsidiary created by J&J in 2021. Prior to that filing, the company was staring at a massive tab of $3.5 billion in verdicts and settlements.

A Dangerous Precedent

Lawyers for plaintiffs and legal experts have warned that the Texas two-step could set a dangerous precedent, giving companies a way to avoid liability for dangerous or defective products. The appellate court decision would now force corporations considering this strategy to carefully assess the risks involved, experts have said.

Bankruptcy filings leave lawsuits pending in trial courts, forcing plaintiffs to engage in settlement negotiations and being denied their day in court. The three-judge panel in Philadelphia rejected J&J’s argument finding the company’s subsidiary, LTL Management, was created solely to file for Chapter 11 protection and that there was no legitimate need for it. Only a debtor in financial distress can seek bankruptcy protection, the court ruled.

What This Decision Means

Monday’s court decision could force J&J to fight talcum powder lawsuits for several years in trial courts. An in-depth Reuters investigation in 2018 showed that J&J officials for decades had been aware of tests showing that the company’s talc sometimes contained traces of carcinogenic asbestos, but concealed that information from regulators and consumers. J&J has maintained that its talcum powder products do not contain asbestos and don’t cause cancer.

Reuters also reported that J&J hired a law firm that specialized in the Texas two-step strategy and even gave a name internally for their effort – Project Plato. The news agency’s reporting showed that employees planning out this strategy had to sign confidentiality agreements and promised to tell no one – not even their spouses – about the plan.

Link Between Talc and Cancers

So far, several studies have shown a link between talc and ovarian cancer, including one whose results were released by researchers at The Tisch Cancer Institute of Mount Sinai Hospital. The team’s findings reported in the European Journal of Cancer Prevention essentially showed that women who used talcum powder in their genital area faced a 20% higher risk of being diagnosed with ovarian cancer compared to women who don’t use the products.

The main ingredient in talcum powder is talc, a soft mineral comprising magnesium, silicon, oxygen, and hydrogen. Several lawsuits have also alleged that the company aggressively marketed its talcum powder products to women over the years with catchy slogans like: “A sprinkle a day keeps the odor away.”

Asbestos and talc are two minerals that naturally form together. While these minerals are similar in composition and develop together over time, deposits of talc are commonly contaminated with asbestos and asbestos-like fibers. Asbestos is known to cause mesothelioma, a cancer that forms primarily in the lining of the lungs or abdomen. Mesothelioma is a cancer that affects the thin membrane protecting several of the body’s most important organs. Each year, there are about 3,000 new cases of mesothelioma in the United States.

Manufacturers of cosmetics have used talc in their products because of its moisture wicking properties. However, they have known for decades that there has been a link between talc and cancers such as mesothelioma and ovarian cancer. Our law firm is handling talcum powder cases alleging ovarian cancer as well as mesothelioma on behalf of affected victims and their families.

Talcum Powder Lawsuits

As plaintiffs’ lawyers who are passionate about justice for our clients, we welcome the U.S. court’s decision rejecting J&J’s bid to dodge liability in these heartbreaking product liability cases. These are cases where victims have suffered life-threatening illnesses or where families have lost loved ones. J&J attempted to block these individuals from seeking justice and their day in court.

At Bisnar Chase, our product liability lawyers are committed to protecting the rights of those who have suffered serious health effects as a result of using J&J and talcum powder products manufactured by other companies that pose the risk of cancer. We are already working with victims to fight for the compensation they deserve.

If you are a victim of these defective products or if you have lost a loved one who used these products, it is important that you contact our experienced talcum powder lawyers, who can help fight for your rights and hold to account corporations that put profits ahead of public health and safety.

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