Johnson & Johnson‘s loss in a federal appeals court over baby-powder litigation could force the health-products company to defend thousands of lawsuits case by case, just as it navigates the biggest restructuring in its 137-year history, the Wall Street Journal reported. The decision by the U.S. Court of Appeals for the Third Circuit rejecting J&J’s efforts to use bankruptcy proceedings to handle talc-related lawsuits means the company won’t be able to resolve the allegations as soon as it could have and in a single court, according to legal experts and analysts. It could also deter other companies from trying the same legal tactic, the legal experts said. For J&J, the ruling could mean it will have to contest the lawsuits in state and federal courts, and the litigation will probably take years longer as cases would revert to standard civil proceedings in each of the courts, the legal experts and analysts said. It could also raise J&J’s talc-settlement costs to as much as $10 billion, according to Wells Fargo analyst Larry Biegelsen. Neal Katyal, outside counsel for the J&J subsidiary, LTL, said the appellate ruling turned on the view that LTL didn’t meet a technical requirement of facing sufficient financial distress. “But the current situation, with a significant volume of current and future claims, and a plaintiff bar business model primed to generate more, is exactly the sort of ongoing and future financial distress that courts have recognized as serving a valid bankruptcy purpose,” he said. “The same conclusion should have been reached here.”
