Bankruptcy judge halts talc, cancer cases

A federal bankruptcy judge on Thursday halted roughly 40,000 lawsuits that allege Johnson & Johnson‘s baby powder and other talc products caused cancer.

The decision is part of J&J’s second attempt to settle thousands of talc cases in bankruptcy proceedings.

J&J in 2021 spun off its subsidiary, LTL Management, to carry its talc-related liabilities and file for Chapter 11 bankruptcy protections. 

Judge Michael Kaplan during a hearing Thursday in U.S. Bankruptcy Court in Trenton, New Jersey, put a temporary hold on the suits that will last through mid-June, The Wall Street Journal reported.

J&J won’t have to go to trial over any other talc claims during the pause, but new lawsuits can still be filed against the company, The Journal reported.

Kaplan said during the hearing that J&J has an “uphill battle” ahead, according to the newspaper.

The pause will give J&J time to reach a permanent settlement with plaintiffs in the talc cases. The company recently proposed an $8.9 million settlement for current and future talc-related claims and said it expects to bring that plan to bankruptcy court in mid-May.

J&J in a statement called Kaplan’ decision “a win for claimants” because it brings them “one step closer” to being able to vote on the proposed settlement. 

The New Brunswick, New Jersey-based company also said it believes claimants will overwhelmingly support the proposal.

J&J previously said more than 60,000 claimants have already committed to voting in favor of the plan.

“When presented with a clear and complete explanation and the opportunity to make an informed choice, we firmly believe the claimants will approve the plan,” said Erik Haas, J&J’s worldwide vice president of litigation.

Kaplan’s decision is narrower than the one he made after LTL Management first filed for Chapter 11 in 2021. 

The judge ruled in February 2022 that J&J can use the bankruptcy system to resolve talc allegations, enabling the company to avoid fighting thousands of individual lawsuits.

Kaplan essentially affirmed J&J’s use of a strategy known as the “Texas two-step,” which allows companies to split valuable assets from liabilities through a so-called divisive merger.

But in January, the U.S. Court of Appeals for the 3rd Circuit overturned that ruling. The appeals court said that neither LTL nor J&J had a legitimate need for bankruptcy protection because they were not in “financial distress.”

Amid the ongoing legal fights, J&J has continued to deny the allegations that its talc products caused cancer.

Chief Financial Officer Joseph Wolk said on an earnings call Tuesday that it was “unfortunate” that J&J has to “put dollars towards quite frankly baseless scientific claims.”

The suits allege J&J’s talc products were contaminated with the carcinogen asbestos, which caused ovarian cancer in thousands of individuals.

Some lawsuits link several deaths to J&J’s talc products.