After a Houston judge denied Johnson & Johnson’s third attempt to resolve approximately 90,000 talcum powder lawsuits through a planned $9 billion Chapter 11 settlement, the company said it will abandon its efforts to rectify the cases through bankruptcy proceedings and is ready to take them on in court.
“Rather than pursue a protracted appeal, the Company will return to the tort system to litigate and defeat these meritless talc claims,” J&J said in a release on Monday night.
On a conference call Tuesday morning, CEO Joaquin Duato added the company was “disappointed” in the ruling but expects “continued success” in litigating cases, pointing out that J&J has won 16 of the last 17 that have come to trial.
The company said it will “reverse” the “approximate” $7 billion it had set aside to settle the cases through the bankruptcy effort and that the court decision does not alter its financial outlook.
“We remain confident in our 2025 guidance as well as our 2025 to 2030 projections,” Duato said during the call. In January, the company said it expects to generate revenue of between $89.2 billion and $90 billion this year.
With the news, J&J’s share price had tumbled by 5% by mid-morning on Tuesday.
"This decision affirms what we have argued all along—J&J’s bankruptcy strategy was nothing more than a bad-faith maneuver to avoid full accountability," Andy Birchfield of the Beasley Allen law firm, who represents some of the plaintiffs, said in a statement. “With this ruling, we are now moving forward without delay to trial, where our clients will finally have the chance to present their cases before a jury and obtain the justice they deserve.”
In dismissing the company’s effort, federal bankruptcy judge Christopher Lopez cited voting irregularities in J&J’s campaign to gain support from 75% of the claimants to accept the settlement.
J&J’s litigation chief Erik Haas said on Tuesday that more than 85% of the claimants signed onto the plan and that Lopez found that opposing law firm Beasley Allen “engaged in outright misconduct” during the voting process.
"Johnson & Johnson is desperate and not telling the truth. In a sound and thoroughly documented opinion, the court rightly concluded that J&J’s third failed bankruptcy scheme was not based on fairness or justice, but rather on a calculated attempt to meet an arbitrary threshold of support by any means necessary—including coercion, manipulation, and misleading claimants," Birchfield said. "To suggest otherwise is simply false. I would invite anyone to read the court’s opinion and judge for themselves whose conduct throughout this process truly crossed the line into outrageous."
While J&J has touted its track record in the talc cases, the losses have been costly, such as a $2.1 billion award secured by 22 women from 12 states in a 2018 decision in Missouri. Last year, an Illinois jury ordered J&J to pay the family of a woman who died of mesothelioma $45 million.
Two months ago, the U.S. Department of Health and Human Services and Veterans Affairs weighed in, objecting to J&J’s settlement effort, saying that bankruptcy procedures are reserved for companies that are in financial trouble.
In their objections, the agencies claimed they would lose their right to reimbursement for care provided through government health programs—such as Medicare and Medicaid—to those who would be compensated in the settlement.
Last year, the U.S. Trustee program—the Department of Justice unit that oversees bankruptcy cases—filed a motion (PDF) to dismiss the Chapter 11 bid, calling the company's strategy “a textbook example of bad faith.”
On Tuesday, Haas said that while pursuing another bankruptcy remains a “potentially viable option,” the company has decided that the “more efficient, effective way” is to try individual cases in court.
“It doesn’t make sense for plaintiffs to be pursuing a losing battle,” Haas said.
Throughout the ordeal, J&J has stuck to its claim that there is no conclusive evidence that its talc products contained asbestos or caused cancer. The company took 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 its baby powder.