J&J puts newly created subsidiary into bankruptcy over talc claims

Johnson & Johnson has created a subsidiary to manage thousands of legal claims alleging its talc caused cancer and placed it into Chapter 11 bankruptcy, in a move critics say is aimed at limiting future payouts.

The New Jersey-based drugmaker said on Thursday the filing by its subsidiary, LTL Management, was intended “to resolve all claims related to cosmetic talc in a manner that is equitable to all parties, including any current and future claimants”.

Legal experts said the manoeuvre could potentially put a stay on pending cases and pressure cancer sufferers into accepting settlements.

“[This] legal strategy is a deliberate attempt to put a stay on cases nationwide and limit J&J’s ultimate payout to people suffering from cancer as a result of using J&J’s talc baby power products that contained asbestos,” said Mark Bratt, an attorney at Weitz & Luxenberg.

“It’s an absolute miscarriage of justice,” added the attorney, who has represented litigants in J&J talc cases.

J&J said it would establish a $2bn trust to facilitate an efficient resolution of claims and had also allocated royalty streams worth more than $350m to further contribute to potential costs.

“We are taking these actions to bring certainty to all parties involved in the cosmetic talc cases,” said Michael Ullmann, executive vice-president, general counsel of J&J.

“While we continue to stand firmly behind the safety of our cosmetic talc products, we believe resolving this matter as quickly and efficiently as possible is in the best interests of the company and all stakeholders,” he said.

J&J faces tens of thousands of legal cases from people who allege its cosmetic talc caused cancer. It has already lost several big cases including a $4.7bn damages award by a Missouri court to 22 woman who blamed their ovarian cancer on asbestos in the drugmaker’s baby powder.

In June the Supreme Court refused to review the case, in which the damages had already been reduced to $2.1bn.

J&J said its actions were not a concession of liability and that it had won the majority of cosmetic talc-related jury trials litigated to date.

Last year, the company said it would stop selling its baby powder in the US and Canada after sales plunged by 60 per cent in three years.

Talcum powder is made from the mineral talc, which, in its natural form, contains asbestos, a substance that can cause cancer. The healthcare industry agreed in 1976 to ensure that all talc products do not contain detectable levels of asbestos.