U.S. states that claim that Johnson & Johnson violated consumer protection laws should mediate their dispute with a unit of the drugmaker separately from individuals who claim that Johnson & Johnson talc products cause cancer, a Bankruptcy Judge Michael Kaplan said yesterday, Reuters reported. The subsidiary, LTL Management LLC, was formed in October to resolve thousands of lawsuits against J&J in bankruptcy court. Judge Kaplan approved the controversial strategy in February, allowing J&J to assign the lawsuits to LTL and then place LTL in bankruptcy. J&J maintains that its baby powder and talc products are safe and asbestos-free, and it has argued that the bankruptcy case is the fairest and most efficient way to resolve the 38,000 lawsuits alleging that the products cause cancer. In March, Judge Kaplan ordered LTL and talc plaintiffs to begin mediation on a potential settlement of the cancer claims. The attorneys general of 40 states sought to join the mediation, saying that no settlement can succeed without the states' input. The states have asserted claims far in excess of the $2 billion that J&J initially set aside for a future bankruptcy settlement. The magnitude of those claims could allow the states to crowd out other stakeholders during negotiations to resolve LTL's bankruptcy. Judge Kaplan said during a court hearing yesterday that the states' claims should be mediated separately and that he intends to appoint a mediator for those claims by May 24. The new mediator will be able to work with the talc victim mediators toward a comprehensive bankruptcy settlement, Kaplan said. Talc plaintiffs have argued that the bankruptcy filing was an abuse of the legal system, and they are appealing Kaplan's decision to allow the case to remain in bankruptcy court.
