Texas Trial to Decide J&J’s $10B Talcum Powder Settlement

Texas Trial to Decide J&J’s $10B Talcum Powder Settlement

Introduction

A high-stakes trial in Texas will determine whether Johnson & Johnson (J&J) can resolve tens of thousands of talcum powder cancer lawsuits through a controversial $10 billion bankruptcy plan.

This comes after two previous attempts were rejected by federal judges, who deemed the strategy an abuse of the bankruptcy system.

Mass Talcum Powder Lawsuits and Proposed Settlement

Johnson & Johnson faces more than 60,000 lawsuits filed by women across the country, alleging that prolonged use of its Baby Powder and Shower-to-Shower products led to ovarian and other reproductive cancers. Plaintiffs claim the company promoted these products for genital use while failing to warn consumers about potential cancer risks. J&J's proposed bankruptcy settlement seeks to consolidate all current and future claims into a single payout, rather than negotiating individual settlements.

Scientific Links and Previous Jury Verdicts

The influx of lawsuits began in 2016 after scientific studies suggested a link between talcum powder use and an increased risk of cancer. Over the years, juries have awarded billions of dollars in damages to plaintiffs, ruling that Johnson & Johnson failed to provide adequate warnings about the potential presence of asbestos in its talcum powder.

Johnson & Johnson’s “Texas Two-Step” Bankruptcy Strategy

Rather than settling cases individually, Johnson & Johnson has repeatedly attempted to shift all legal liability into a newly created subsidiary, which then files for bankruptcy under Chapter 11. This strategy, known as the “Texas Two-Step,” allows a financially strong company to transfer its legal burdens to a separate entity, shielding itself from direct liability. However, federal bankruptcy judges have twice rejected J&J’s attempts, ruling that the company does not face a genuine financial threat and that the bankruptcy filings were made in "bad faith" to limit compensation for affected women.

Increased Settlement Offer and Latest Bankruptcy Filing

In September 2023, Johnson & Johnson proposed an $8 billion settlement, claiming that over 75% of claimants supported the offer. However, the proposed payout was later increased to $10 billion as the company continued to push for bankruptcy protection to block further litigation.

As part of this plan, J&J created a new subsidiary, Red River Talc LLC, transferring all talcum powder lawsuit liabilities to this entity, which then filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas. Critics argue that the move exploits Texas' bankruptcy laws, which are perceived to be more favorable to corporate defendants, despite J&J’s financial stability and market valuation of $390 billion.

Trial Begins Over Talcum Powder Bankruptcy Plan

On February 18, a trial commenced before a U.S. Bankruptcy Judge, who will decide whether the bankruptcy plan can move forward. The trial is expected to last about two weeks, concluding on February 28, though the timeline for a final ruling remains uncertain.

Government and Plaintiff Objections to the Plan

Many plaintiffs, along with the federal government, strongly oppose the bankruptcy proposal. The U.S. Department of Health and Human Services and the Department of Veterans Affairs argue that the settlement would prevent them from recovering healthcare costs paid through Medicaid and Medicare for affected plaintiffs. Attorneys representing the victims have also urged the Judge to reject the plan, allowing individuals to continue pursuing their claims separately.

Uncertain Outcome and Future Implications

As the trial proceeds, legal experts and affected individuals are closely watching the outcome. A ruling in favor of Johnson & Johnson could set a precedent for how large corporations handle mass tort litigation through bankruptcy, while a rejection would force the company to negotiate settlements through the traditional court system. The final decision will have far-reaching consequences for thousands of plaintiffs seeking justice for their injuries.