Johnson & Johnson's $8.9B bankruptcy settlement is 'unworkable,' talc plaintiff lawyer says

Are plaintiffs who are suing Johnson & Johnson for its talc products ready to approve an $8.9 billion settlement to resolve their claims through a second bankruptcy procedure?

Conflicting reports last week from lawyers representing talc plaintiffs left little clarity about their intention to accept the new package.

Late last week, a plaintiff's steering committee guiding the multidistrict litigation said in a release that J&J’s proposal was far from adequate. The 14-person board—made up of lawyers from companies who represent the talc plaintiffs—said it was unanimous in its rejection of J&J’s offer.

This came two days after a group of 17 law firms and a group called Talc Powder Justice announced their support of the $8.9 billion deal.

“There is a group of lawyers that is supporting this bankruptcy plan,” Leigh O’Dell, a lawyer from Beasley Allen, who co-chairs the plaintiff steering committee, said in an interview. “Most of them have gotten in the litigation either very late, since the last bankruptcy, or have not been in the leadership, working up these cases, really understanding what these clients have gone through.”

An $8.9 billion package would provide the 70,000-plus plaintiffs engaged in talc litigation against J&J an average of roughly $120,000, O’Dell said. 

“The medical costs for an average ovarian cancer victim is about $225,000, so it makes this proposed bankruptcy plan absolutely unworkable,” O’Dell said.

James Murdica, an outside counsel for J&J, contends that Beasley Allen's lack of success in talc trials over the last decade has left the law firm seeking a hgher return.

"They have all this capital and all the time their employees spent on talc litigation and they can't recover their 12% common benefit fee," Murdica said. 

Among the 17 law firms that have been vocal in supporting the $8.9 proposal have been Nachawati Law Group of St. Louis and Watts Guerra LLC of San Antonio.

If the deal is allowed by New Jersey federal bankruptcy Judge Michael Kaplan, it would have to be signed off on by at least 75% of claimants to be approved, Guerra said in its release.

Murdica said that if the vote is put to claimants, more than 90% will accept. This belief comes from discussions with lawyers of plaintiffs over the last three years.

"Overall, it's fair if you look at other mass tort settlements, in terms of average claim value," Murdica said.

Last week, when Kaplan dismissed J&J’s bankruptcy case, he derailed an appeal by the company to the U.S. Supreme Court and reactivated claims that had been kept out of court system for 18 months.

But that didn’t last long. Moments after the loss, J&J announced its fresh bankruptcy attempt.

“To have the Third Circuit issue the opinion that it did—describing in great detail why this was a misuse of bankruptcy—and then within an hour and 39 minutes, following the dismissal of the first bankruptcy, to have a second bankruptcy filed is shameful,” O’Dell said.   

J&J's offer comes after years of litigation, including a high-profile trial that resulted in a $4.7 billion verdict against the drugmaker. The verdict was later reduced to $2.1 billion after appeals.

J&J has lost nine talc trials that are either on appeal or have been resolved. Out of 41 trials, 32 have ended in a win by J&J, a mistrial or plaintiff verdicts that were reversed on appeal. Separately, the company in 2020 moved to settle around 1,000 cases for $100 million, Bloomberg reported at the time.

If finalized, this deal would rank among the largest in pharma history. In 2021, J&J agreed to pay $5 billion of a $26 billion opioid settlement. A year earlier, Bayer's payed $10 billion to settle a Roundup deal.

Other leading pharma settlements in history have been struck by ⁠GSK, ⁠Pfizer and ⁠J&J.