Dietrich Knauth and Mike Spector
NEW YORK (Reuters) – Johnson & Johnson said on Wednesday it was moving forward with an offer to pay $6.48 billion to settle tens of thousands of lawsuits alleging its baby powder and other talc products contain asbestos and cause ovarian cancer.
The deal will allow the company to resolve lawsuits by filing a third bankruptcy filing for the subsidiary, J&J (NYSE:) said.
J&J will begin a three-month voting period in hopes of reaching a consensus to settle all current and future ovarian cancer claims. Those claims account for 99% of the talc-related lawsuits filed against J&J, including about 54,000 centralized in New Jersey federal court.
Courts rejected two previous attempts by J&J to resolve lawsuits by bankruptcy of a subsidiary created to absorb the company’s talc liabilities, ruling that the company did not qualify for bankruptcy protection because it was not in “financial distress.”
J&J, which says its products do not contain asbestos and do not cause cancer, said its settlement is supported by attorneys representing most of the plaintiffs who filed cancer-related lawsuits against the company.
Eric Haas, J&J’s vice president of worldwide litigation, said gathering votes before filing for bankruptcy would allow the new plan to succeed where J&J’s previous efforts failed.
“Plaintiffs have the right to vote, and that’s the main difference,” Haas said on a call with investors Wednesday, referring to legal challenges that led courts to reject previous bankruptcy filings for the J&J subsidiary before the vote.
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J&J said it is confident the deal will win the support of 75% of remaining claimants needed for a bankruptcy settlement that would end litigation entirely, including future lawsuits, and prevent people from opting out of the deal to file individual claims.
Lawyers representing cancer victims appear divided over the proposal.
“I believe J&J’s proposed plan announced today will bring peace and closure to our customers and the thousands of women who fought alongside us to seek justice,” said Jim Onder, who represents about 21,000 talc claimants and supported J&J’s previous bankruptcy. offer.
Other lawyers said J&J is trying to “pack the ballot box” by getting votes from lawyers who have not sued J&J or whose clients have types of gynecological cancers that do not have a strong scientific link to talc.
Mike Papantonio, a lawyer opposing the deal, said J&J is “secretly persuading law firms to accept their deal by promising quick paychecks to some opportunistic lawyers.”
J&J’s Haas rejected claims that the vote should be supplemented by non-ovarian cancer cases, saying they are “baseless and nothing more than a red herring.”
The proposed deal would build on J&J’s settlement with about 95% of the people who sued the company after developing mesothelioma, a rare form of cancer linked to asbestos exposure, as well as settlements with U.S. states that alleged the company failed to warn consumers about dangers of talc products.
RESERVES $11 BILLION
J&J said it had set aside $11 billion to cover all of its talc payouts, including resolving claims outside bankruptcy proceedings by state attorneys general and people who claim asbestos-tainted talc caused their mesothelioma. The company also settled bankruptcy claims against its talc suppliers.
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In its second subsidiary bankruptcy filing, J&J offered to pay $8.9 billion to resolve ovarian cancer, mesothelioma and state claims. This time, J&J has decided to handle what Haas estimates are up to 100,000 ovarian cancer bankruptcy cases while settling other cases under traditional settlements.
Previous bankruptcy filings paused Talc’s litigation from 2021 to 2023, but litigation resumed after a federal judge ruled that the latest bankruptcy case must be dismissed in July 2023.
In March, J&J got a new chance to challenge scientific evidence linking talc to ovarian cancer in a centralized lawsuit in federal court in New Jersey. The judge overseeing the cases said recent changes in the law and new scientific evidence required a new review and asked J&J to present new scientific arguments by the end of July.
J&J said it will continue to defend against the lawsuits as it tries to gather votes on the settlement. The company said it has won 95% of ovarian cases to date, including all cases reviewed over the past six years.
The litigation resulted in several large verdicts for plaintiffs, including $2.12 billion in damages for 22 women who blamed their ovarian cancer on asbestos in J&J talcum powder. Last month, J&J was ordered to pay $45 million in its mesothelioma case and win its ovarian cancer case.
J&J stopped selling talc-based baby powder in favor of cornstarch-based products, citing an increase in lawsuits and “misinformation” about the safety of the talc-based product.
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