On Tuesday, February 18, 2025, Johnson & Johnson (J&J) faces a pivotal moment in its ongoing legal battles, as U.S. Bankruptcy Judge Christopher Lopez in Houston will decide whether to approve the company’s $10 billion proposal to settle thousands of lawsuits over its baby powder products. The settlement aims to resolve claims from more than 62,000 plaintiffs who allege that J&J’s talc-based products, including baby powder, were contaminated with asbestos and caused ovarian and other cancers, a claim J&J continues to deny.
The hearing, which has been ongoing for several weeks, centers on whether J&J can use a subsidiary’s bankruptcy to resolve the litigation. The company has faced setbacks in its previous attempts to settle these lawsuits through a bankruptcy proceeding. This marks J&J’s third attempt to resolve the talc litigation through the bankruptcy court, this time via its subsidiary, Red River Talc.
J&J argues that this strategy, known as a “third-party” bankruptcy, offers a faster and fairer resolution for cancer victims than a protracted court battle. The company’s legal team claims that the bankruptcy plan has garnered broad support from plaintiffs, making it a historic opportunity to resolve a long-standing and contentious legal issue. Red River Talc’s attorney, Allison Brown, stated in court that “there is enormous support for a historic and unprecedented plan.”
However, the settlement proposal has been met with significant opposition. Critics, including some plaintiffs’ attorneys, argue that the voting process for the plan was flawed and manipulated to secure J&J’s preferred outcome. Adam Silverstein, representing plaintiffs who oppose the deal, accused J&J of challenging every vote against its plan while allowing votes in favor to be tampered with. He contended that the company ignored requests to change “yes” votes to “no” and accepted votes from attorneys who failed to meet the legal requirements for casting a vote on behalf of their clients. Silverstein described the situation as a “blatant double standard.”
At the heart of the issue is the use of bankruptcy law to bind claimants to the settlement, even if they do not agree with the terms. Bankruptcy law allows such settlements to apply to all plaintiffs, including those who would prefer to pursue their claims in court. J&J contends that this approach will allow victims of cancer to receive compensation more quickly, avoiding the uncertainty of lengthy and expensive court trials.
Opponents of the deal argue that it unfairly pressures cancer victims into accepting lower settlements, particularly given the questionable validity of the votes in favor of the bankruptcy proposal. They believe that women with ovarian cancer should not be forced to accept a settlement they feel is inadequate, especially when the evidence suggests the vote may have been manipulated.
Judge Lopez will consider several key issues during the hearing, including the legitimacy of the votes cast last year and whether a large corporation like J&J should be allowed to use bankruptcy to shield itself from future litigation. The proceedings are expected to last until the end of February 2025, with Judge Lopez indicating that he will issue a written opinion once the hearing concludes.
J&J maintains that its bankruptcy proposal offers a better recovery for plaintiffs than what they might receive from individual trials. Erik Haas, J&J’s vice president for litigation, defended the proposal, stating that it has “overwhelming support” from cancer victims and would provide claimants a better financial recovery than a drawn-out legal process.
The case has significant legal implications, as it raises questions about the use of bankruptcy proceedings to resolve mass tort cases. The outcome will determine not only the future of this specific litigation but also the extent to which bankruptcy courts can be used to resolve complex multi-district legal disputes in the U.S.
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