Legislation and litigation
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Johnson & Johnson is considering creating a new subsidiary to accommodate its extensive asbestos commitments, according to reports in the Wall Street Journal and other news outlets.
The J&J subsidiary will then file for Chapter 11 bankruptcy, potentially saving multinational companies billions of dollars.
Reuters news agency also reported on the sub-possibility, citing unnamed personal injury lawyers who learned of the option while negotiating their existing claims with J&J officials.
A Johnson & Johnson spokesman did not confirm the reports.
“Johnson & Johnson Consumer Inc. has not decided any particular course of action in this litigation other than to continue to defend the integrity of talc and litigate these cases in the tort system, as the pending trials show,” the company said in a statement. statment.
A controversial legal strategy could help settle thousands of pending claims linking J&J’s talc-based baby powder to ovarian cancer and malignant mesothelioma.
For the plaintiffs, the move would likely lead to lengthy bankruptcy proceedings and reduce compensation for those who have not previously settled. Much will depend on how the affiliate is financed.
If it becomes a reality, the plaintiff’s attorneys will likely challenge the maneuver vigorously in court.
Increasing number of lawsuits at Johnson & Johnson
Johnson & Johnson currently faces an estimated 30,000 lawsuits in US courts today, most of them blaming asbestos-contaminated talc products for cancers and other medical issues.
A small portion of these include mesothelioma, a rare cancer that often results from exposure to asbestos. The naturally toxic metal is often found near where talc is mined.
J&J continues to insist that its talc products are safe and do not cause cancer, citing several studies that have demonstrated no clear link between talc use and ovarian cancer.
Other studies have shown opposite results. A Reuters investigation in 2018 revealed that Johnson & Johnson officials had known for decades that asbestos was found in their talc products, but had ignored the warning signs.
Jury verdicts have been mixed in recent years. Some have sided with J&J, while others have awarded large sums to plaintiffs, although some have been reduced on appeal.
The company has been consistent in its claim that its talc-based products are safe to use and continues to vigorously fight lawsuits and judgments.
It could change soon.
In June, the US Supreme Court rejected a request from J&J to consider rescinding a $2.1 billion award for 22 women it blamed on tainted talc for causing ovarian cancer.
The rejection came as no surprise to J&J, which committed $3.9 billion earlier in 2021 for future talc-related litigation, according to regulatory filings with the US Securities and Exchange Commission. The amount was double what the company reported in the previous year’s filings.
In 2020, J&J announced that it would stop selling talc-based baby powder in the United States and Canada, citing low consumer demand and “misinformation” about the product’s safety.
The discontinuation came less than a year after the company recalled 33,000 bottles of its baby powder when the U.S. Food and Drug Administration announced that a lab test found small traces of asbestos in one sample.
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Bankruptcy can change everything
Filing for bankruptcy after creating a new subsidiary would effectively halt the ongoing lawsuit. Other companies have used it effectively in recent years, according to a Reuters report.
For example, Georgia-Pacific employed a similar strategy to reorganize and limit liability in 2017 when it created Bestwall LLC, shortly before filing for bankruptcy in North Carolina.
A bankruptcy gambit allows a company like Johnson & Johnson to avoid potentially huge settlements or jury rulings. It will put several lawsuits in one court as a bankruptcy proceeding. It often takes several years to settle.
J&J, which has an estimated market value of $445 billion, is facing potential lawsuits on several fronts beyond asbestos.
It recently agreed to pay $263 million to settle opioid claims in New York state. Earlier this month, it pulled Aveeno and Neutrogena sunscreen products from US stores after the cancer-causing substance benzene was found in samples.
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