J&J Loses Supreme Court Bid To Stay In Bankruptcy

J&J Loses Supreme Court Bid To Stay In Bankruptcy

Introduction

Despite the firm's planned Supreme Court appeal to use bankruptcy to resolve tens of thousands of cases over its talc products, a U.S. judge stated that a Johnson & Johnson subsidiary cannot delay a court ruling rejecting its bankruptcy.

J&J attempted to use the bankruptcy of its subsidiary firm, LTL Management, to prevent more than 38,000 lawsuits alleging asbestos contamination in the company's baby Powder and other talc products. J&J claims that their consumer talc products are safe and do not contain asbestos.

In January, the 3rd U.S. Circuit Court of Appeals in Philadelphia determined that neither LTL nor J&J had a valid need for bankruptcy protection since they were not in "financial hardship."

LTL sought the 3rd Circuit to stay its verdict until it could file an appeal with the United States Supreme Court. In a brief written ruling, the 3rd Circuit refused that request, instead instructing a U.S. bankruptcy court to dismiss LTL's Chapter 11 lawsuit. LTL has yet to file a formal petition with the United States Supreme Court.

The judge presiding over LTL's bankruptcy case in Trenton, New Jersey, stated that he was willing to dismiss the bankruptcy and continue talc claims once the 3rd Circuit issued a formal mandate of its January ruling, which it has already done.

The bankruptcy of LTL halted a flood of talc lawsuits, including the nearly 38,000 claims consolidated in a New Jersey federal court action. The lawsuits will be reopened after LTL's bankruptcy is over.

According to an attorney representing the official committee of talc claimants in the bankruptcy case, victims of J&J's talc products are now closer to returning to courts and juries of their peers to seek justice and proper recompense. Although LTL battled to keep its bankruptcy, the jury had already permitted one case to be retried.

J&J did not reply quickly to a request for comment. In a court statement, LTL stated that its bankruptcy provides a mechanism to properly and expeditiously settle all talc claims rather than subjecting the business and plaintiffs to "lottery-like results" produced by previous trials.

According to bankruptcy court papers, the corporation faced $3.5 billion in judgments and settlements prior to the bankruptcy filing, including one case in which 22 women were granted a judgment of more than $2 billion.

J&J has won defense victories in 16 trials and appeals that have either reversed or reduced plaintiffs' initial wins in other instances.

J&J said in 2020 that it will end selling its talc Baby Powder in the United States and Canada owing to "misinformation" regarding the product's safety and later revealed its intention to withdraw the product globally in 2023.