%1

Bankruptcy Judge Craig Whitley sided with lawyers for more than 38,000 people who have sued J&J over claims one of the company’s most recognized products caused cancer and other health problems. The ruling, over whether the lawsuits can continue during bankruptcy proceedings, is just the opening move in what is likely to be a long court fight, Bloomberg News reported. Judge Whitley rejected J&J’s request for a temporary pause in the cases. But he will consider giving J&J a longer-term shield early next month when the parties come back for a hearing in which the company may be able to offer more evidence to support its position. “It is troubling we can’t find agreements” that back up J&J’s claims, Judge Whitley said during a hearing in Charlotte, North Carolina, on Friday. J&J was unable to find key documents that could prove a corporate restructuring in late 1978 moved responsibility for older talc claims away from the parent. After the number of lawsuits claiming harm from J&J products rose, the company set up a new unit that is responsible for paying off the claims and then put that entity into bankruptcy. The unit, LTL Management, will try to negotiate a trust fund that would end all current and future lawsuits related to J&J’s talc products. Earlier this year, the company paid $2.5 billion to about 20 women who blamed J&J’s baby powder for their ovarian cancer. Both the Missouri Supreme Court and the U.S. Supreme Court refused to overturn the verdict.

A bankruptcy judge said that he is unsure whether his North Carolina courtroom is the right venue for a Johnson & Johnson subsidiary to potentially settle tens of thousands of talc-related injury claims and suggested that the case could be moved closer to the consumer goods giant’s New Jersey headquarters, WSJ Pro Bankruptcy reported. Judge J. Craig Whitley of the U.S. Bankruptcy Court in Charlotte, N.C. also on Wednesday scheduled a November hearing over whether the J&J subsidiary placed into chapter 11 last week should be moved to a bankruptcy court in Delaware or New Jersey, where thousands of talcum-related injury lawsuits have been litigated for years. J&J formed the subsidiary, LTL Management LLC, on Oct. 12, and it filed for bankruptcy on Oct. 14. Filing bankruptcies in states far from corporate headquarters is common practice in large corporate restructurings, but feeds public perception that chapter 11 rules tilt the playing field in favor of large institutions, according to some legal researchers. LTL Management’s chapter 11 filing effectively shifts to North Carolina the fate of nearly 40,000 pending lawsuits alleging talc used in Johnson’s Baby Powder caused ovarian cancer, asbestos poisoning and other illnesses. J&J maintains its talc-based products, which it stopped selling in the U.S. and Canada last year, don’t cause ovarian cancer and haven’t contained asbestos. The new J&J subsidiary’s only connections to North Carolina are a bank account and its having been created there, Judge Whitley said. Its chapter 11 filing also raises questions about the corporate reorganization J&J undertook before LTL Management sought bankruptcy protection, the judge said. LTL Management said in a court filing that it has a Bank of America N.A. account in Charlotte. Read more. 

In related news, Johnson & Johnson offered $4 billion to settle with victims of its talc-based powder months before putting one of its units into bankruptcy -- twice the amount it’s now proposing to pay through a forced resolution, Bloomberg News reported. The $4 billion offer was aimed at ending more than seven years of litigation over claims its iconic baby powder caused different types of cancers. J&J faces nearly 40,000 suits targeting its talc-based products, and has agreed to about $3.5 billion in settlements so far, according to court filings. The world’s largest maker of health care products reportedly wanted to split the $4 billion between trusts established to settle current and future suits. The trusts would have been created as part of the 2019 bankruptcy case filed by Imerys Talc America Inc., J&J’s talc miner. Lawyers representing a substantial number of talc plaintiffs rejected the $4 billion settlement offer as part of the Imerys case as too low. Plaintiffs would have each received about $40,000 for their cases on average. J&J last made the proposal in March. After it was rebuffed, the company’s attorneys told their counterparts to prepare for a bankruptcy filing by a J&J unit later in the year. Read more.