The United States Court of Appeals for the Third Circuit in Philadelphia has rejected a Chapter 11 petition that was submitted by a recently established subsidiary of Johnson & Johnson (J&J) named LTL Management. If approved, the petition would have permitted the pharma giant to avert having to pay out billions of dollars in trial accolades for its cancer-causing baby powder. However, the petition has been rejected.
In October, J&J established LTL Management in order to deal with more than 38,000 talcum baby powder cases that had led to a total of $3.5 billion in judgements & settlements, including one instance in which 22 women were granted a judgment that was more than $2 billion.
What would have occurred, had the Third Circuit Court not thrown down this little plan, is that J&J would have moved all obligation for these judgements & payouts onto LTL Management, which is basically a shell investment firm where all liability would have gone to die.
“While LTL confronts substantial future talc liability, its funding backstop plainly mitigates any financial distress foreseen on its petition date,” a panel of three judges wrote. The panel went on to note that “good intentions” such as protecting the “J&J brand or comprehensively resolving litigation… do not suffice alone.”
A lawyer representing mesothelioma patients claims that Johnson & Johnson is attempting to “pervert the bankruptcy system.”
J&J spokesman Allison Fennell revealed that the firm wants to appeal this verdict, stressing that the talc products in issue are safe and do not cause cancer as the cases in question established.
Fennell said to the media that “resolving this case as fast and effectively as possible is in the best interests of claimants and all parties.” This is something that the company has stated from the beginning of the process.
“We continue to stand behind the safety of Johnson’s Baby Powder, which is safe, does not contain asbestos, and does not cause cancer.”
In the past, J&J was unsuccessful in its attempt to dispose of all of the talc lawsuits by appealing the decision. After that strategy was unsuccessful, the firm decided to establish a subsidiary known as LTL Management. The corporation thought that this subsidiary would be able to absorb all of the litigation, so sparing the company from having to pay out billions of dollars in judgements and settlements.
The plaintiffs in all these cases against J&J celebrated the Third Circuit Court’s ruling, stating that the decision “is a point-by-point rejection of J&J’s attempt to pervert the bankruptcy system and trample the constitutional right to a jury trial of all Americans harmed by deadly products,” announced Jon Ruckdeschel, a lawyer representing numerous victims of mesothelioma.
“Bankruptcy courts are for honest enterprises who are in financial difficulties, not billionaire mega-corporations like J&J, 3M, and Koch Industries that attempt to seal courtroom doors to their victims,” said one proponent of this viewpoint.
Last November, lawyers who represented over 7,000 talc personal injury claims stated that the bankruptcy court “relied on unsubstantiated conjecture and defective evidence.” They added that the bankruptcy court also “applied baseless estimations.”
J&J will now have to appeal this new verdict with the U.S. Supreme Court, this being “the only hope left,” according to legal analyst Carl Tobias, “which permits review in a minuscule fraction of appeals.”
To put it another way, Johnson & Johnson has very well exhausted all of its available choices and will be forced to make good on all of those judgements and settlements. It is quite unlikely that the firm will be able to find a method to avoid making amends to the tens of thousands of victims who were harmed as a result of the talc baby powder that it manufactured and sold.
Since the decisions on these claims, J&J has discontinued selling all talc baby powder products both in the United States and Canada. In 2023, we shall put an end to any and all remaining sales of the product in any other part of the globe.