Johnson & Johnson (J&J) offered a $8.9 billion deal to settle thousands of lawsuits related to its talc-based baby powder, the company announced Tuesday afternoon.
J&J subsidiary LTL Management LLC (LTL) re-filed for voluntary Chapter 11 bankruptcy protection to obtain approval of a reorganization plan that “will equitably and efficiently resolve all claims” from the talc lawsuits.
The pharma giant said it will pay nearly $9 billion over the next 25 years to resolve all current and future talc-based claims. Additionally, LTL secured the support of more than 60,000 current claimants on these terms, the company said in a press release.
As part of the settlement, J&J is also not admitting any wrongdoing or changing its “longstanding position that its talcum powder products are safe.”
“The Company continues to believe that these claims are specious and lack scientific merit,” Erik Haas, worldwide VP of litigation at J&J, said in a statement. “However, as the Bankruptcy Court recognized, resolving these cases in the tort system would take decades and impose significant costs on LTL and the system, with most claimants never receiving any compensation. Resolving this matter through the proposed reorganization plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner, and enables the Company to remain focused on our commitment to profoundly and positively impact health for humanity.”
The controversy surrounding J&J’s talc-based baby powder and allegations that contamination with asbestos caused ovarian cancer and mesothelioma has followed the company for years. Over several decades, J&J sold talc-based baby powder and marketed the product to women and young children.
The first lawsuit against J&J regarding its talc-based baby powder was filed in 2009, prompting a slew of class-action lawsuits against the company over the next decade alleging that it knew its talc contained asbestos and caused cancer.
In January 2020, then-J&J CEO Alex Gorsky testified that the company took steps to ensure the baby powder’s safety. Amid the ongoing legal wrangling, J&J announced last August that it would stop global sales of its talc-based baby powder in 2023.
At the start of 2022, J&J embraced a tricky legal maneuver known as the “Texas two-step,” which would allow the company to file for bankruptcy in the Lone Star State and saddle its subsidiary LTL with liabilities related to the talc lawsuits.
In April 2022, a federal judge ruled that J&J’s controversial bid to file for bankruptcy wouldn’t stop a class-action lawsuit over its talc products from proceeding.
In September, the U.S. Court of Appeals for the Third Circuit heard oral arguments for the company’s talc bankruptcy ‘bad faith’ claims. Subsequently, a federal judge indicated in February that he would dismiss J&J’s bankruptcy case once the Third Circuit Court issued a formal mandate.
In mid-March, the Third Circuit Court rejected J&J’s bid to have its appeal reheard, prompting the company to say it would challenge the ruling at the Supreme Court, which was seen as a long-shot bid.
Following the recent legal developments and settlement announcement, where this saga goes from here is still up in the air.
Wells Fargo’s legal expert said it sees the odds that the settlement goes through at “50/50,” citing questions around the previous rejection of a bankruptcy attempt by J&J.
