Johnson & Johnson makes third attempt at reorganization to resolve talc claims

By Sarah Lizee

Olympia, Wash., May 1 – Johnson & Johnson is making a third attempt at a plan of reorganization by its subsidiary, LLT Management LLC, for the comprehensive and final resolution of all current and future claims related to ovarian cancer arising from cosmetic talc litigation against it and its affiliates in the United States, according to a Wednesday morning press release.

“The plan is the culmination of our consensual resolution strategy that we announced last October,” Erik Haas, worldwide vice president of litigation at Johnson & Johnson, said in the release.

“Since then, the company has worked with counsel representing the overwhelming majority of talc claimants to bring this litigation to a close, which we expect to do through this plan.”

Johnson & Johnson said the ovarian claims to be resolved by the plan constitute 99.75% of the pending talc lawsuits against the company and its affiliates in the United States.

The remaining pending personal injury lawsuits relate to mesothelioma and will be addressed outside of the plan. The company said it has already resolved 95% of mesothelioma lawsuits filed to date.

The state consumer protection claims will also be addressed outside the plan. Johnson & Johnson said it already has agreements in principle to do so.

The company said it has also reached an agreement in principle to resolve all talc-related claims against it in the bankruptcy cases filed by suppliers of its talc, including Imerys Talc America, Inc. and Cyprus Mines Corp.

The plan provides for a three-month solicitation period during which ovarian claimants may vote for or against the plan. If 75% of claimants vote in favor of the plan, a company subsidiary may file a consensual pre-packaged Chapter 11 bankruptcy to secure its confirmation, Johnson & Johnson said.

As reported by Prospect News, the LLT subsidiary filed its initial Chapter 11 bankruptcy petition in October 2021. The case was dismissed in January 2023, and the company made a second filing in April 2023. That case was dismissed in July 2023.

“Unlike the prior cases, it is the vote of the claimants – and not the conflicting financial incentives of the small minority of plaintiff lawyers who stand to receive excessive legal fees outside of a reorganization – that decides whether the plan may proceed,” Haas said.

The plan intends to pay ovarian claimants a present value of about $6.475 billion over 25 years.

To account for settlements and the comprehensive resolution of the ovarian claims through the plan, the company said it recorded an incremental charge of about $2.7 billion in the first quarter of 2024, for a total reserve of roughly $11 billion, or $13.7 billion nominal payable over 25 years.

The company said it will continue to pursue alternative resolution pathways, including appealing the dismissal of LLT’s prior bankruptcy, litigating in the tort system against claimants who elect not to settle, and pursuing affirmative claims for “false and defamatory narratives” about the company’s products.

Johnson & Johnson planned a Wednesday conference call with investors to discuss the announcement. A replay will be available at www.investor.jnj.com.

Beasley Allen responds

A group of attorneys representing tens of thousands of women with talc claims is challenging the plan, saying it would “weaponize unrelated claims in exchange for votes on a payment plan that would cheat victims legitimately harmed by talc,” the Beasley Allen Law Firm said in a Wednesday morning release.

“It’s a shocking new legal strategy that could strip consumers of their constitutional rights and allow major corporations to evade responsibility for the harm caused by defective products,” the firm said.

In October 2021, at the time of the first bankruptcy, there were about 35,000 lawsuits alleging talc-caused ovarian cancer or mesothelioma.

After the U.S. Court of Appeals for the Third Circuit dismissed the first case as bad faith, Johnson & Johnson produced an agreement with attorneys claiming to represent 60,000 claimants.

“Previously these attorneys had filed few if any lawsuits against the company,” the law firm said.

“Many new claimants do not have ovarian cancer or mesothelioma – the only two conditions for which there is a scientific connection to talc.”

Beasley Allen said that if the company can “stuff the ballot box,” this tactic will become a precedent for other companies to avoid responsibility and subvert the bankruptcy system in the same way.

“We view this as another example of the abusive and underhanded tactics J&J has been using for years,” Mike Papantonio of Levin Papantonio Rafferty said in the release.

“J&J is covertly soliciting law firms to accept their deal, promising a swift payday for some opportunistic lawyers.”

“This will be the third bankruptcy in three years,” trial lawyer Richard Golomb, of Golomb Legal PC, said in the release.

“I just hope the bankruptcy courts do not allow the company to get away with manipulating the legal process and bankruptcy law by improperly shopping for a forum that will give the company what it wants.”

Johnson & Johnson is a consumer products company based in New Brunswick, N.J.

© 2015 Prospect News.
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