What Would Johnson & Johnson Bankruptcy Mean for Talc Cancer Lawsuit Plaintiffs?

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If you’re the plaintiff in a talc cancer lawsuit, the mid-October news headlines about talc powder product manufacturer Johnson & Johnson filing for bankruptcy are enough to make you worry. What could this move mean for the claim you’re pursuing to get the compensation your family needs?

Although it’s wise to be aware of what’s going on, plaintiffs don’t have to panic. The outstanding talc powder cancer claims against Johnson & Johnson won’t just disappear. What’s more likely is that you may potentially be more limited in how you go about resolving your case and where the funds for your payout come from.

Understanding How Bankruptcy Might Affect Talcum Powder Cancer Lawsuits

It can be difficult to make sense of what’s really going on with the Johnson & Johnson bankruptcy situation. On October 14, 2021, Law 360 reported that J&J has filed for Chapter 11 bankruptcy for LTL Management, the new subsidiary in which the company holds its talc liabilities.

Rumors about this move have been in the headlines for months. Talc powder cancer claims have been going on for years.

In 2020, Johnson & Johnson spent $4 billion on litigation expenses associated with “talc related reserves and certain settlements,” according to J&J’s 2020 Annual Report. The 2020 fiscal year was “unfavorable” compared to 2019, J&J reported, and these expenses are likely part of the reason.

Other setbacks for the company, talc-related and otherwise, occurred in 2021. Forbes called the refusal of the United States Supreme Court to hear the company’s appeal of a 2018 talc powder ovarian cancer trial ruling that awarded $2.1 billion to 20 plaintiffs “yet another crisis” for J&J. (The original ruling had included 22 plaintiffs and amounted to $4.69 billion, but a Missouri appeals court had reduced the award and removed certain plaintiffs from the case in 2019, according to The Hill).

As of August 2021, J&J was facing more than 30,000 talc powder cancer lawsuits, according to Reuters. While most of these claims alleged that Johnson & Johnson’s talcum powder products had caused ovarian cancer, some cases were instead filed over mesothelioma, a rare type of cancer closely linked to asbestos exposure.

When rumors first surfaced that Johnson & Johnson was reportedly considering a potential plan for restructuring and bankruptcy, claimants were understandably worried. In August 2021, Reuters reported that plaintiffs in talc cancer claims felt that, if the company moved forward with restructuring, it would be “taking steps that they believe could shift valuable assets out of their reach.”

The plaintiffs “preemptively asked a federal judge to block the consumer products giant” from using corporate restructuring tactics to separate the ongoing talc litigation from the rest of its business and declare bankruptcy for that business, Bloomberg Industry Group reported. However, a bankruptcy judge in Delaware was “uncertain” about whether this request could legally be granted as of August 2021, according to Reuters. The judge ultimately denied the plaintiffs’ request to put a stop to this potential plan at the end of August 2021, according to Claims Journal.

It wasn’t until mid-October, months after the ruling that denied plaintiffs’ request to block plans of this nature, that J&J announced that it was, in fact, seeking Chapter 11 bankruptcy protection for the subsidiary with which it had stuck the talc liabilities facing the company. With the move, J&J may have been “hoping to drive settlements with victims of ovarian cancer and mesothelioma,” The Wall Street Journal reported.

What Would Possible Restructuring Mean for Talc Cancer Plaintiffs?

By dividing the portion of the company that faces legal liability for talc injury lawsuits from the rest of the company and declaring bankruptcy for that subsidiary, J&J has changed things for plaintiffs. Rather than going to trial, cases may be more likely to settle out of court. Talc cancer settlements are likely to be lower in value than jury awards—but it’s worth noting that cases that settle without going to trial also tend to cost significantly less to pursue. Settling a case rather than going to trial doesn’t mean plaintiffs won’t get the money they deserve.

While it may not be impossible for a newly created subsidiary to end up running out of money to pay the claims previously filed against its parent company, it’s common for the parent company in a situation such as this to set up and fund a trust from which payments would be distributed to compensate plaintiffs. Law 360 reported that LTL Management had “the financial backing of Johnson & Johnson, coupled with a dedicated trust and significant financial resources.” J&J has committed to creating a $2 billion trust to fund the payment of talc liability claims and has already allocated revenue streams that would be used to pay the costs of claims, according to Law 360.

If you’re feeling worried about the news of restructuring and bankruptcy plans for Johnson & Johnson, let us ease your mind. The best thing you can do for your claim is put it in the hands of an experienced product liability attorney—which, if your lawsuit is in progress, is most likely a step you have already taken. The attorneys involved in these legal matters are keeping a close watch on the situation and are always ready to act in their clients’ best interests. If you have specific concerns and questions, you can always reach out to your attorney and ask.

If you or a loved one has only recently been diagnosed with cancer that you believe could be caused by talc powder use, you may not have had the chance to file a lawsuit just yet. Don’t let this news discourage you from moving forward—but do make it a priority to talk to a lawyer sooner rather than later so you can get your claim started as quickly as possible.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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