J&J faces allegations it used 'fraudulent maneuvers' to avoid compensating talc plaintiffs

As Johnson & Johnson sorts through a mountain of litigation claiming its talcum-based powders caused users to develop cancers, the company has now been slapped with a related but different allegation.

Women represented by six law firms who previously filed lawsuits against J&J over their cancer claims have filed a new class-action lawsuit in U.S. federal court. In the latest turn in the legal saga, lawyers for the plaintiffs argue J&J used a series of “fraudulent maneuvers” to avoid paying out compensation to cancer victims and their families, according to a press release.

The lawsuit specifically takes issue with three recent moves by J&J: the 2021 creation of its subsidiary LTL Management in an effort to deflect talc-related liabilities; the spinoff of its consumer health arm into the new company Kenvue, which the plaintiffs also claim was used to create an “additional, unlawful shield” against litigation; and the replacement of a $61.5 billion funding agreement with LTL with one capped at $29.9 billion following the subsidiary’s first failure in bankruptcy court.

J&J set up LTL (which now goes by the name LLT) in Oct. 2021, with the subsidiary promptly filing for bankruptcy in an attempt to wrangle thousands of talc lawsuits through a move known as the Texas two-step. The Court of Appeals for the Third Circuit dismissed LTL’s original bankruptcy filing in January of 2023.

J&J's bankruptcy maneuver has attracted plenty of criticism. In September, Senate Majority Whip Dick Durbin, D-Illinois, grilled Erik Haas, J&J's global vice president of litigation, over the move at a Senate Judiciary Committee hearing. Durbin accused J&J—a profitable and valuable company—of exploiting the bankruptcy system in order to deflect liability from talc-related claims. The lawmaker also questioned why J&J has floated multibillion-dollar settlements while also dismissing the talc-related lawsuits against the company as "meritless." 

Meanwhile, the latest lawsuit claims J&J’s efforts to limit liability through the bankruptcy courts delayed trials and “other forms of resolution to the class for more than two years.” 

The proposed class action targets J&J, its subsidiary and executives such as CEO Joaquin Duato and Kenvue helmsman Thibaut Mongon.

“Johnson & Johnson is playing a dark game of chess with this country's financial and judicial systems," attorney Mike Papantonio, of the firm Levin Papantonio Rafferty, said in a statement. "With a net worth of nearly $400 billion, this corporation has deliberately manipulated assets to sidestep its obligations to ovarian cancer victims and in so doing has robbed them of true and rightful justice."

Earlier this month, J&J looked like it could resolve more than 50,000 lawsuits linking its popular talc-based baby powder to ovarian cancer, thanks to a proposed “Plan of Reorganization” that—if confirmed—would see the company pay cancer claimants roughly $6.48 billion over 25 years to resolve 99.75% of its remaining talc lawsuits in the U.S.

Claimants now have about two months left to vote for or against J&J’s plan, with the company arguing an approval would be in their best interest given that the claimants “have not recovered and will not recover anything at trial.”

More recently, a study from the National Institutes of Health found that there's a “positive association between genital talc use and ovarian cancer.” But J&J's legal chief Haas pointed out that the results "do not establish causality and do not implicate any specific cancer-inducing agent.” 

J&J halted worldwide sales of its talc-based baby powder in 2023. The company has since replaced the product with a cornstarch-based version.