Talc plaintiffs file for restraining order to block Johnson & Johnson's 3rd bankruptcy attempt

As Johnson & Johnson has tried to resolve talcum powder lawsuits that have been consolidated in a multidistrict litigation in New Jersey, the company has had to deal with two groups of plaintiffs—one that wants to accept a settlement and another that doesn’t.

Wednesday, lawyers representing the latter group announced they had filed a motion asking a New Jersey federal court to issue a restraining order that would block a J&J subsidiary from filing for bankruptcy, which would facilitate a new settlement offer of $6.48 billion.

The filing states that the ovarian cancer victims who have sued J&J will suffer “irreparable harm” if the bankruptcy is allowed to proceed.

“We will employ every appropriate mechanism possible to stop J&J from using bankruptcy to deprive women of their individual right to choose whether to settle or proceed to a jury trial,” Andy Birchfield of Atlanta-based law firm Beasley Allen said in a release. “Individuals should not be coerced to accept unreasonable settlement values and terms through the bankruptcy vote of a group of others. On behalf of our clients, we will press on through all of J&J’s delay tactics and bullying.”

In response, J&J’s legal chief Erik Haas belittled the restraining order effort, saying that the company will ask the court to reject the “frivolous filing.”

“This is yet another meritless pleading by the same small group of plaintiff law firms who have fought every single effort to resolve this litigation to date, and who continue to lard the court’s docket with filings to use as media statements in an effort to divert attention from their ethical breaches,” Haas said in a statement.  

This is the third attempt from J&J to use the bankruptcy ploy—also known as a Texas two-step—to free itself from facing current and future lawsuits from users of J&J’s iconic baby powder and other products that contain talc. More than 61,000 lawsuits have been combined in the New Jersey multidistrict litigation.

With the Texas two-step maneuver, J&J creates a subsidiary in which to funnel the lawsuits and then declares it bankrupt. Two previous attempts to use the tactic were denied by courts that determined the subsidiaries were not in financial distress. The ploy—which has been used successfully by companies such as Georgia Pacific and 3M—could save J&J billions.

While the company has been successful in litigating most of the cases that have gone to court, there have been costly decisions such as a $2.12 billion award to 22 women in Missouri in 2018. Two months ago, an Illinois jury ordered J&J to pay the family of a woman who died of mesothelioma $45 million.

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.

In J&J’s last attempt to forward a bankruptcy, it drew up a settlement offer of $8.9 billion, which would have applied to fewer plaintiffs. That attempt was thwarted in January 2023.

For the current settlement offer to be accepted, at least 75% of the plaintiffs would need to sign on. This week’s motion for a restraining order suggests the coalition of lawyers representing the plaintiffs who oppose a settlement fear that they could lose the vote.

“Johnson & Johnson is advertising its bankruptcy plan to a group of desperate and dying claimants,” Mike Papantonio of Pensacola, Florida-based law firm Levin Papantonio Rafferty said in the release.

Meanwhile, Haas said the opposing law firms are “placing their personal economic interests above those of their clients in an attempt to secure a windfall.”

“Beasley Allen, the ring leader of these efforts, has lost every case it tried and never collected a dime for its clients, despite a decades-long effort,” Haas added. “With that dismissal record, the law firms unsurprisingly have not even endeavored to proffer any legitimate rationale for refusing to endorse and recommend that their clients accept the company’s resolution, which is one of the largest in the history of mass tort litigation."

Earlier this week, J&J finalized an agreement to pay $700 million to 42 states and the District of Columbia to resolve consumer protection claims over its marketing of the baby powder. In January of this year, the company confirmed the settlement figure.