By Dietrich Knauth and Mike Spector
(Reuters) – Johnson & Johnson’s renewed effort to resolve talc lawsuits through an $8.9 billion bankruptcy settlement must be dismissed as a “fraudulent scheme” that defies a court order rejecting the company’s previous attempt to settle the litigation, according to a court filing from lawyers representing cancer victims.
The attorneys, in the filing on Monday, denounced J&J’s move to refile its subsidiary LTL Management for bankruptcy, which relies on a controversial legal maneuver, just two hours after its first case was dismissed.
They said the company had fraudulently transferred $50 billion in assets away from LTL to get around a ruling from the 3rd U.S. Circuit Court of Appeals that it was not in sufficient “financial distress” to qualify for bankruptcy.
“The Third Circuit certainly did not invite the Debtor to commit fraud so that it could re-file for bankruptcy,” the plaintiffs’ attorneys wrote in Monday’s filing.
J&J said last week that its new bankruptcy plan was the best way to resolve current and future talc lawsuits alleging that its baby powder products cause cancer, including more than 38,000 cases that have previously been filed in federal court in New Jersey.
J&J maintains that its talc products are safe and do not cause cancer.
The healthcare conglomerate faces twin challenges to succeeding where its first attempt failed: prevailing against inevitable legal challenges seeking to toss the LTL Management Chapter 11 filing again, and garnering necessary support from cancer victims who have once again become creditors in the subsidiary’s bankruptcy.
J&J said that 70,000 claimants had signed up to support its new $8.9 billion settlement plan, but it is not clear whether the company will reach the 75% support it needs to get its settlement approved in bankruptcy court.
The plaintiffs’ new filing disputes J&J’s claimed level of support, saying that 40,000 plaintiffs oppose the new settlement, and that the company had created the appearance of support by signing agreements with latecomer law firms that “have never filed a talc-related lawsuit against J&J.”
J&J did not provide an estimate of the total number of talc claims it faces when asked. The company is attempting to address future lawsuits in addition to cases already filed against it.
Jim Onder, who represents 21,000 talc claimants and supports J&J’s settlement offer, said that it is not unusual for law firms to represent many clients whose cases have not been filed. That’s especially true for J&J talc cases, because LTL’s first bankruptcy stopped new lawsuits from being filed after October 2021, he said.
(Reporting by Dietrich Knauth, Mike Spector and Daniel Levine; Editing by Bill Berkrot)
