Johnson & Johnson to Pay $8.9 Billion Over 25 Years to Settle Talcum Powder Lawsuits

Amidst more than 40,000 lawsuits filed by former customers concerning Johnson & Johnson (J&J)’s allegedly carcinogenic talc-based baby powder, the company proposed an $8.9 billion settlement in bankruptcy court on April 4 to settle claims that its talc-based products caused cancer. 

Related article: J&J’s Market Value Plummets by $17 Billion After Appeals Court Denies Bankruptcy Escape 

J&J’s Latest Attempt to End Years of Lawsuits

According to J&J’s Securities and Exchange Commission filing, the proposed settlement would be paid over the next 25 years through its subsidiary LTL Management LLC (LTL). This subsidiary refiled bankruptcy to enable the $8.9 billion trust. J&J also stated that if the bankruptcy court approves this reorganization plan, the agreement “will efficiently resolve all current and future claims arising from cosmetic talc litigation against the company and its affiliates in North America.”

The plaintiffs’ reactions to J&J’s proposal, which could be one of the largest product liability settlements in U.S. history, were mixed. On the one hand, lawyers representing roughly 70,000 plaintiffs said the deal was a “landmark” and a “significant victory for the tens of thousands of women suffering from gynecological cancers caused by J&J’s talc-based products.” 

On the other hand, there are lawyers unimpressed with the proposed settlement, stating that the settlement is bad for victims, and thinking that it would either be blocked in court or fail to persuade enough claimants to approve it. According to a lawyer whose law firm represents about 10,000 cases, “Even though $8.9 billion sounds like a lot of money, when you spread it out it comes out to not very much at all for the people who suffered.” Another lead attorney representing plaintiffs even criticized J&J’s action as an “attempted abuse of the bankruptcy system.”

J&J Pledges Extra $6.9 Billion as LTL Refiles Bankruptcy

Public concerns about contamination with asbestos, a known human carcinogen, in talc-based baby powder have plagued J&J for many years. Since J&J’s first defeat in an ovarian cancer lawsuit in federal court in 2013, the company has begun to face a tsunami of lawsuits over its asbestos-containing baby powder. As of early 2023, J&J has already been forced to pay billions of dollars in verdicts and settlements.

In 2021, the pharmaceutical giant formed a new subsidiary called LTL Management and transferred the liabilities related to its baby powder lawsuits to that subsidiary. According to LTL’s first bankruptcy filing in October 2021, J&J pledged $2 billion to LTL for payouts to plaintiffs. However, in late January, a federal appellate court in Philadelphia dismissed this filing, ruling that J&J cannot use a corporate bankruptcy to escape the liabilities stemming from lawsuits over its allegedly carcinogenic baby powder products.

Under the latest proposal, LTL will file for Chapter 11 bankruptcy protection again in the United States Bankruptcy Court for the District of New Jersey. On top of the $2 billion previously committed, J&J will further pledge $6.9 billion to resolve all existing and future baby powder claims.

The Legal Battle Remains Far From Over

J&J continues to deny any wrongdoing and insists that the claims regarding its talcum powder are “specious and lack scientific merit”. Yet the healthcare conglomerate has made a series of big moves in this controversy, from terminating its global sales of talc-based baby powder to now offering a new settlement proposal with a significantly higher payout, demonstrating the company’s intention to put the matter to rest as soon as possible.

Nevertheless, this long-running legal battle may still be far from over. First, the new bankruptcy filing by LTL and the settlement proposal must first be accepted by the court. Besides, after LTL’s request for the federal appellate court in Philadelphia to reconsider the denial of its first bankruptcy filing was rejected in March, J&J had already indicated that it would take the case to the Supreme Court, which is likely to prolong the legal process. Furthermore, the criminal probe into whether J&J lied about the potential cancer risks of its baby powder is still underway. This investigation may also take years to resolve.

Author

Richard Chau