Staggering under load of talc litigation, J&J supplier Imerys America seeks shelter in bankruptcy

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Three Imerys units filed for bankruptcy as the talc supplier faces "historic" liabilities. (Pixabay)

Facing “historic” liabilities from thousands of lawsuits claiming its products caused cancer, Johnson & Johnson talc supplier Imerys Talc America and two associated companies filed for bankruptcy protection Wednesday.

The filing comes as the supplier faces about 14,650 claims that talcum products caused ovarian cancer or mesothelioma, a type of lung cancer associated with asbestos, the Wednesday filing said. Imerys already faces millions of dollars in verdicts and settlements in the J&J powder litigation. In one case last year, a jury ordered the talc supplier to pay $25 million.

For its part, J&J faces about 11,700 lawsuits alleging harm from talc, according to its most recent quarterly filing.

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Imerys Talc America, plus Imerys Talc Vermont and Imerys Talc Canada, sought bankruptcy to escape mounting legal fees and gain time to settle the lawsuits, the company said. The filings are the “best course of action to address our historic talc-related liabilities and position ... for continued growth," Imerys Talc America president Gorgio La Motta said in a Wednesday statement.

“[D]ozens of peer-reviewed studies, as well as regulatory and scientific bodies" have backed talc's safety, La Motta added, calling the plaintiffs' claims "entirely without merit." But it's not in Imerys' best interest to lay out "millions of dollars in projected legal costs" to defend itself in court, he said.

Though other companies produce talc, Imerys has historically been J&J's sole supplier for its cosmetic talc products and the talc lawsuits "routinely" named the company a co-defendant alongside the healthcare giant, the filing said. And that's put an outsized legal burden on the talc supplier. "Although personal care/cosmetic sales make up only approximately 5% of the Debtors’ revenue, approximately 98.6% of the pending Talc Claims allege injuries based on use of cosmetic products containing talc," the filing states.

The Imerys units have certain indemnification agreements with J&J that should protect them from ovarian cancer and mesothelioma liability, the bankruptcy filing claims, but J&J has so far either denied that they exist or disputed their terms. A J&J representative didn't immediately respond to a request for comment on the filing.

By filing for bankruptcy, the Imerys units believe they can operate as usual while securing “time and protection” to come to an agreement with current and future talc plaintiffs. Imerys said it expects to emerge from bankruptcy in the first half of 2020.

RELATED: Asbestos case against Johnson & Johnson, Imerys climbs to $117M in damages 

The talc litigation isn’t just taking a toll on Imerys. Johnson & Johnson has been fighting thousands of lawsuits and has suffered costly losses in recent years. The healthcare giant has been able to overturn many of those losses on appeal, but last summer, it suffered its biggest defeat to date. A jury ordered the company to pay a whopping $4.69 billion verdict after a trial that combined the claims of 22 women.

Despite its setbacks in court, J&J says the science supports its product. It's pledged to appeal the cases it has lost.

RELATED: J&J stock tumbles after Reuters reports it hid asbestos in talc  

Even with safety assurances from J&J, investors sent the company's shares down late last year after Reuters published a report claiming J&J had known about asbestos in its talc supply for decades. J&J’s shares fell about 10%, and still haven’t fully recovered.

Since 2014, about 16,500 lawsuits claim the talc products caused ovarian cancer, and about 13,800 are still pending, the Imerys bankruptcy filing states. Over the same time frame, Imerys has faced 1,200 mesothelioma claims, with about 850 of those still outstanding.

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