Facing more than 25,000 lawsuits alleging that its talcum products cause cancer, Johnson & Johnson is weighing a plan to mitigate the astronomical costs to resolve them, Reuters reports.
The company is exploring the possibility of creating a new business to absorb the liabilities associated with the litigation and then seek bankruptcy protections, the news service reports, citing people familiar with the talks.
The company has yet to decide if the plan is feasible, the news service says. In the end, J&J could choose not to pursue the strategy, Reuters notes.
In response to a request for comment on Monday, the company issued a statement.
"Johnson & Johnson Consumer Inc. has not decided on any particular course of action in this litigation other than to continue to defend the safety of talc and litigate these cases in the tort system, as the pending trials demonstrate.”
As of earlier this year, J&J estimated that its talc liabilities are worth around $3.9 billion, the drugmaker said in an annual filing with the SEC.
After years of defending its Baby Powder and other talc products, J&J's legal efforts faced a major setback last month when the U.S. Supreme Court rejected the company's appeal of a $2.11 billion verdict for women who developed ovarian cancer.
In that case, J&J had argued that a trial combining the claims of 22 cancer patients from 12 states was unfair. The company said the process added undue emotional weight to the proceedings and stripped the company of its right to address claims on a case-by-case basis.
Even after that loss, the company now faces around 28,900 talc lawsuits.
Splitting a company up for the purpose of claiming bankruptcy, also referred to as the Texas Two-Step, isn’t a new strategy for those facing asbestos claims. A paper towel manufacturer previously pursued the legal approach to address its own asbestos suits, Reuters reports.
Meanwhile, J&J also has been in court for years over opioids. Last month the company inked a $230 million settlement to remove itself as a defendant in New York from an opioid trial. The company ceased its manufacture and sale of opioids last year.