By adding $1.1 billion to its settlement proposal, Johnson & Johnson is inching closer to resolving approximately 62,000 personal injury lawsuits from those who claim their cancers were caused by the company’s talcum powder products. Reuters reported the new offer, citing two sources familiar with the negotiations.
In a statement, J&J did not confirm the figure but did say (PDF) that it has convinced Allen Smith, of the Mississippi-based Smith Law Firm, to support the company’s prepackaged bankruptcy plan. Smith, who had been a holdout, will now recommend to his 12,000 clients that they sign off on the deal.
With Smith’s support, J&J said it is “confident” that it will secure enough votes from plaintiffs to “facilitate an expeditious confirmation” of the plan. For that to happen, J&J needs 75% of the claimants to accept the deal. The company said it expects certification of the plan to be completed later this month.
With the increased funding, J&J’s offer has grown to $7.6 billion, which works out to more than $122,000 per plaintiff, minus legal fees.
“As the lawyer who started this litigation and tried the most cases, I feel strongly that the terms being offered to talc claimants are fair and that this is the best and most realistic option available for claimants to recover for their claims in a timely manner,” Smith said in J&J’s release. “The opposition to this plan has no meaningful alternative proposal for getting their claimants a better recovery on any sort of realistic timeline, and therefore, any opposition should cease.”
Smith's about-face on J&J's plan comes after partnering on a majority of his talc cases with the Beasley Allen law firm, which has long opposed a settlement.
"Mr. Smith has no authority to alter the previous vote on our mutual clients, in which they overwhelmingly rejected J&J's bad faith bankruptcy plan," Andy Birchfield of Beasley Allen,, said in a statement. "Those individuals are not required or expected to accept any recommendation that he may make as to the proposed settlement of their claims. We, together with many other firms, will continue to represent the collective best interests of our clients in seeking an agreement with J&J that provides fair and timely compensation to the victims of the company's products."
The offer is part of a controversial plan in which the company has set up a subsidiary to handle the claims and then declare it bankrupt. Several other companies have used the maneuver, called a Texas two-step, to resolve class-action lawsuits.
Over the last three years, courts have rejected two other J&J bankruptcy attempts. But two months ago, a New Jersey federal court turned back a bid by a group of plaintiffs to gain a temporary restraining order that would have put a third bankruptcy plan on hold.
As the bankruptcy efforts have progressed, lawyers opposing a settlement have seen their support erode. They have been hoping to take their cases to jury trials and potentially score a huge award such as the $2.1 billion that 22 women from 12 states secured from a Missouri court in 2018. Earlier this year, an Illinois jury ordered J&J to pay $45 million to the family of a woman who died of mesothelioma.
But, of the cases that have gone to trial, J&J has won a majority of them. The company has stuck to its claim there is no conclusive evidence that its talc products contained asbestos or caused cancer.
J&J has taken the products off the market, first in North America in 2020 and then the rest of the world in 2023. The company now sells a cornstarch version of the baby powder.