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The U.S. Supreme Court on Tuesday let stand a $302 million judgment against Johnson & Johnson in a lawsuit brought by the state of California accusing the company of concealing the risks of its pelvic mesh products, Reuters reported. The court, following its usual practice, did not give any reason for refusing to hear J&J's appeal. J&J had argued to the Supreme Court that state consumer protection laws like California's are too vague, exposing companies to unpredictable state lawsuits. Business groups including the U.S. Chamber of Commerce backed the company. California sued New Jersey-based J&J in 2016 in San Diego Superior Court. The case stemmed from a multistate investigation into J&J subsidiary Ethicon Inc's marketing of pelvic mesh devices, which are surgical implants that were used to treat incontinence and other conditions. J&J and other mesh makers were already facing numerous private lawsuits by women who said they suffered pain, urinary problems, bleeding and other serious injuries from the devices. The lawsuits have resulted in more than $8 billion in settlements. J&J, which stopped selling pelvic mesh in 2012, has denied wrongdoing. In 2019, the U.S. Food and Drug Administration ordered all pelvic mesh devices off the market. Later that year, J&J and Ethicon reached a $117 million settlement with 41 states and the District of Columbia to resolve claims that they concealed the products' risks. California did not take part in that settlement, and its lawsuit resulted in a $344 million judgment in January 2020 following a non-jury trial.

Crypto lender BlockFi Inc. has asked for a court ruling stripping Sam Bankman-Fried ‘s offshore investment vehicle of the protections of chapter 11, citing the recent seizure of its assets by federal prosecutors, WSJ Pro Bankruptcy reported. BlockFi, itself bankrupt since November, sought Thursday to dismiss the bankruptcy case of Emergent Fidelity Technologies Ltd., the offshore investment vehicle that Mr. Bankman-Fried used to purchase a 7.6% stake in Robinhood Markets Inc. The chapter 11 case serves little purpose and was only filed to undermine BlockFi’s claim to the Robinhood shares, according to BlockFi’s motion in the U.S. Bankruptcy Court in Wilmington, Del. Court-appointed liquidators in Antigua and Barbuda, where Emergent is based, placed it under chapter 11 earlier this month after federal prosecutors seized its Robinhood stake and cash holdings. BlockFi said in its filing that Emergent has no property to administer that would qualify it for chapter 11 and only filed bankruptcy as a litigation tactic. BlockFi has staked a claim to the Robinhood shares as collateral for $600 million in loans it made to Mr. Bankman-Fried’s crypto trading firm Alameda Research. The new management team guiding FTX and Alameda through their own chapter 11 cases has also claimed an interest in Emergent’s assets, which now sit in a government-controlled account.

Ohio lawmakers have revived bipartisan legislation that would level the playing field for Ohioans who were sexually abused by Boy Scout leaders and want to seek financial relief from the organization, the Columbus (Ohio) Dispatch reported. Ohio House Bill 35, introduced last week by Reps. Bill Seitz, R-Cincinnati, and Jessica Miranda, D-Forest Park, stems from rules laid out in the Boy Scouts of America's bankruptcy settlement. It would scrap Ohio's civil statute of limitations for child sex abuse in bankruptcy cases, allowing survivors to recoup the full amount owed to them. The House passed the bill late last year, but it failed to clear the Senate during the Legislature's lame-duck session. That means Seitz and Miranda are starting from scratch. Boy Scouts of America filed for bankruptcy in 2020 as it faced hundreds of lawsuits across the country from former scouts who said they were molested and raped by leaders and volunteers. Nearly 2,000 abuse claims have been filed in Ohio alone. The settlement, approved in September, allows survivors to apply for a $3,500 expedited payout. Alternatively, survivors can pursue an independent review or see where they fall on a matrix that doles out money based on the severity and frequency of abuse. For those two options, the state's statute of limitations is a key factor. In Ohio, survivors of child sex abuse have until age 30 to file a lawsuit against the perpetrator or affiliated institution. Per the settlement rules, Ohio's current law would limit survivors to 30% to 45% of what they're eligible for under the matrix. They would not qualify for an independent review.

Cryptocurrency executives had hoped that 2023 would herald a new beginning after a year of disastrous setbacks. Instead, the industry has found itself on the receiving end of an aggressive government crackdown, the New York Times reported. Last month, the Securities and Exchange Commission levied fines and other penalties against crypto lending firms, while federal banking officials issued policy statements that appeared calculated to make it harder for crypto companies to participate in the mainstream finance system. In the last few days, the pace has accelerated. Two high-profile crypto firms — including a popular exchange where people buy and sell digital coins — came under intense pressure from state and federal regulators. After announcing a settlement with the exchange, the S.E.C. also fined a crypto promoter and sued a start-up that issued digital coins, for a total of three enforcements in just over a week. The actions are likely a prelude to a protracted spell of legal wrangling, as regulators respond to the market turmoil that caused prominent crypto companies to file for bankruptcy last year and cost investors billions of dollars. And the enforcement signals a growing urgency in Washington, D.C., to address the threat posed by cryptocurrencies, an experimental technology that enables new forms of financial speculation. For years, regulators were criticized for failing to come to grips with the crypto industry, even as it grew into a multitrillion-dollar business. In November, the FTX crypto exchange, once regarded as one of the most reliable firms in the freewheeling industry, failed practically overnight, and its founder, Sam Bankman-Fried, was charged with orchestrating a yearslong fraud. That put regulators under intense pressure to act. Crypto companies have long existed in a legal gray area, with legislators and government officials debating how they should be classified for regulation. The industry’s growth has outstripped the slow-moving federal bureaucracies that oversee the other parts of the finance industry, like traditional banks and publicly traded companies.

A federal judge showed growing impatience Thursday with FTX founder Sam Bankman-Fried’s use of the internet, suggesting that incarceration might eventually be the most effective way to prevent him from violating his bail conditions by communicating on electronic devices in ways that can't be traced, the Associated Press reported. Judge Lewis A. Kaplan did not immediately change a $250 million bail package that lets Bankman-Fried live with his parents in Palo Alto, California, while preparing for trial on charges that he cheated investors and looted customer deposits at FTX, his cryptocurrency trading platform. But he raised the possibility for the first time that jail might be the only way to ensure Bankman-Fried won't outfox the government with ways to use electronic devices in ways that can't be tracked. “There is a solution, but it’s not one anybody’s proposed yet,” Kaplan said as Bankman-Fried sat passively at the defense table. He then noted that there may be many devices in Bankman-Fried's family home that the government will not be tracking, even with any new rules imposed on his bail conditions.

A Delaware bankruptcy judge on Wednesday denied a request by the U.S. Justice Department for an additional independent investigation into FTX’s collapse, saying it would needlessly suck up funds that could go to customers, WSJ Pro Bankruptcy reported. Bankruptcy Judge John Dorsey said existing probes by the cryptocurrency exchange’s new management and government authorities were sufficient. The judge praised the qualifications of FTX’s new chief executive, John J. Ray III, who was brought on to succeed FTX founder Sam Bankman-Fried as CEO just before the company filed for chapter 11 in November. “There is no question that Mr. Ray is completely independent of prior management,” Judge Dorsey said. Ray and his team are investigating FTX’s collapse, while federal and state agencies are doing their own probes, making additional review unnecessary, the judge said. Judge Dorsey said that a new investigation by an outside examiner would need to bring in a team of experts, a move that could lead to more than $100 million in extra costs—counter to the bankruptcy’s purpose to recover as much money as possible for FTX customers and creditors.

Debtors of bankrupt crypto lender Celsius Network have presented a sale plan to the U.S. Bankruptcy Court of the Southern District of New York, Coindesk.com reported. The plan is as part of the overall reorganization plan for Celsius' retail platform and mining business and has the support of the official committee of unsecured creditors. At the center of the plan is an in-principle agreement with NovaWulf Digital Management, a digital asset investment firm, making it the plan sponsor. The debtors chose NovaWulf as it "provides the best method to distribute the debtors’ liquid crypto assets and maximize the value of the Debtors’ illiquid assets through a new company run by experienced asset managers," the filing said. The plan is the product of the debtors’ court-approved sales process which Celsius Network lawyers had outlined in January 2023. They had said that the bankrupt crypto lender is planning to reinvent itself as a new, publicly traded “recovery corporation” in order to exit the bankruptcy process. The "comprehensive" sale process involved debtors’ advisors contacting over 130 parties and executing non-disclosure agreements with 40 potential bidders. This was whittled down to six bids for the retail platform, and three bids for the mining operation. The next step will be to finalize a binding agreement to designate NovaWulf as the successful bidder. According to the plan, NovaWulf will make a direct cash contribution of $45 million to $55 million to NewCo, a term used a describe a corporate spin-off before it is assigned a final name. Read more.

The bankruptcy case filed by Johnson & Johnson's subsidiary shouldering talc-related lawsuits will soon be dismissed unless a U.S appeals court agrees to reconsider its decision to nix the company's attempt to offload the litigation into chapter 11 proceedings, a federal judge said yesterday, Reuters reported. Bankruptcy Judge Michael Kaplan said during a hearing in Trenton, New Jersey that he intends to toss the chapter 11 case once the Philadelphia-based 3rd U.S. Circuit Court of Appeals issues a formal mandate to carry out a Jan. 30 ruling by a three-judge panel to dismiss the matter. The 3rd Circuit panel ruled that the J&J subsidiary, called LTL Management, had no legitimate claim to chapter 11 protection because it did not face financial distress. The dismissal is on hold since LTL asked the full 3rd Circuit late on Monday to reconsider the panel's decision. Should the 3rd Circuit deny that request, Kaplan could dismiss the case within days. "It is my intent, when the mandate is issued, to issue an order dismissing the case," Judge Kaplan said during yesterday's hearing. Read more.

In related news, Johnson & Johnson is preparing to again defend thousands of lawsuits linking its talc-based products to cancer as the company attempts to revive a bankruptcy strategy that has kept the mass injury litigation on hold for more than 16 months, WSJ Pro Bankruptcy reported. Greg Gordon, a lawyer representing J&J’s bankrupt talc unit, LTL Management LLC, said yesterday the company is requesting that a federal appellate court revisit and reverse its recent ruling dismissing the chapter 11 case. LTL may pursue its appeal with the U.S. Supreme Court, if necessary, he said. In the interim, Mr. Gordon said the company is contingency planning and preparing to resume defending the talc litigation outside bankruptcy court. “It is a herculean effort to get the defense team back in place to manage cases around the country,” Mr. Gordon said during a hearing in the U.S. Bankruptcy Court in Trenton, N.J. Yesterday's hearing comes weeks after a three-judge panel of the U.S. Court of Appeals for the Third Circuit dismissed LTL’s chapter 11 case, which has kept the talc litigation on pause since October 2021. The appellate ruling found that LTL wasn’t eligible for bankruptcy because its parent, J&J, had agreed to fund its chapter 11 expenses and any potential settlement of claims that Johnson’s Baby Powder and Shower to Shower caused ovarian cancer and contained asbestos. Read more.

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