Introduction:
A US court has ruled that Johnson & Johnson (J&J) cannot delay a court order dismissing its bankruptcy, despite the company’s planned Supreme Court appeal to use bankruptcy to resolve tens of thousands of lawsuits over its talc products. J&J had sought to use the bankruptcy of its subsidiary company, LTL Management, to halt more than 38,000 lawsuits alleging the company’s Baby Powder and other talc products are contaminated with asbestos. However, the court has ruled that J&J’s request to delay the bankruptcy order will not be granted. This article will examine the background to the case and the implications of the court’s decision for J&J and its talc products.
Background:
For several years, J&J has faced lawsuits alleging that its talc products, including its Baby Powder, are contaminated with asbestos, a carcinogenic mineral. As we reported previously, the company has denied these claims and has fought the lawsuits in court. In 2020, J&J’s subsidiary, LTL Management, filed for bankruptcy in an attempt to resolve the lawsuits. The bankruptcy filing automatically halted the lawsuits, giving J&J time to develop a plan to resolve them. However, in March 2021, a US bankruptcy court dismissed the bankruptcy case, ruling that it was filed in bad faith and was an attempt to evade the claims of the plaintiffs.
Court ruling:
Following the dismissal of the bankruptcy case, J&J asked the court to delay the order dismissing the case, arguing that it needed more time to prepare for its Supreme Court appeal. However, the court has now ruled that J&J’s request to delay the order will not be granted. This means that the lawsuits against J&J will proceed, and the company will need to defend itself against each of the 38,000 claims individually.
Implications:
The court’s decision is a significant setback for J&J in its efforts to resolve the talc lawsuits. With the bankruptcy case dismissed, the company will need to defend itself against each claim individually, which could be a long and costly process. Furthermore, the dismissal of the bankruptcy case may affect J&J’s ability to negotiate settlements with the plaintiffs. Previously, J&J had proposed a settlement of around $10 billion to resolve all the talc lawsuits. However, the dismissal of the bankruptcy case means that this settlement is now unlikely to be accepted by the plaintiffs, who will be seeking individual compensation through the courts.
Conclusion:
The US court’s decision not to delay the order dismissing J&J’s bankruptcy case is a significant setback for the company in its efforts to resolve the talc lawsuits. J&J will now need to defend itself against each of the 38,000 claims individually, which could be a long and costly process. Furthermore, the dismissal of the bankruptcy case may affect J&J’s ability to negotiate settlements with the plaintiffs. Overall, the ruling is a reminder of the risks associated with talc products and the importance of thorough testing and safety measures to ensure consumer protection.
