Johnson & Johnson Talcum Powder

Beasley Allen Calls on Regulators to Stop ‘Shameful’ J&J Bankruptcy Plan

Beasley Allen attorneys representing several thousand women who have been diagnosed with ovarian cancer after exposure to Johnson & Johnson (NYSE:JNJ) (“J&J”) Baby Powder and other talc-based products are denouncing the company over reports it is considering filing for bankruptcy and using that to threaten plaintiffs to settle their cases for less than they are worth.

“J&J is attempting to commit fraud on the judicial system as well as on the bankruptcy court,” says Jere L. Beasley, Principal and Founder of the Beasley Allen law firm. Mr. Beasley was the first trial lawyer to obtain financial compensation – $72 million – in a courtroom battle with J&J. “This company has literally killed thousands of innocent women who believed and trusted them. We cannot allow this company to compound their conduct that borders on being criminal.”

How would Johnson and Johnson Bankruptcy Happen?

According to a July 18 report by the Reuters news agency, Exclusive: J&J exploring putting talc liabilities into bankruptcy, sources say Johnson & Johnson, which has a $443 billion market capitalization, is considering a disingenuous corporate spinoff that would place the talc litigation liabilities in a subsidiary that would immediately file for Ch. 11 bankruptcy.

As the Reuters report notes, this would have the effect of unfairly limiting J&J’s financial exposure and potential recoveries of thousands of women who have suffered simply because they trusted J&J’s products, including Johnson’s Baby Powder and Shower to Shower brands. The Wall Street Journal is also reporting that J&J is considering creating a talc-based subsidiary and then plunging it into bankruptcy.

Dozens of studies published in peer-reviewed journals during the past 25 years have shown a statistically significant association between talc use and life-threatening injuries. Documents produced in litigation about these issues have demonstrated that J&J was aware of the dangers as far back as the 1960s.

Since 2013, juries in numerous trials have found J&J liable for compensatory and punitive damages to ovarian cancer victims. Last year, a Missouri appellate court entered a $2.1 billion judgment against J&J. Justices found “significant reprehensibility” in J&J’s handling of the issue of asbestos in its baby powder and concluded that J&J avoided “adopting more accurate measures for detecting asbestos,” discussing the asbestos risk of the powder in internal memos and refusing until recently to replace talc in its baby powder with cornstarch, which doesn’t pose a cancer risk.

Both the Missouri Supreme Court and the United States Supreme Court declined to overturn the award. A bankruptcy filing by a J&J subsidiary that is laden with all of J&J’s liabilities for its talc-based products could significantly reduce the compensation available to remaining claimants and would prevent them from having their day in court.

“This is about as shameful as it gets,” says attorney Leigh O’Dell of Beasley Allen, co-lead counsel of the plaintiff’s steering committee in federal multidistrict litigation (MDL) in New Jersey. “These women and their families have already suffered so much. If this report is true, we believe it’s time for Congress and the Securities and Exchange Commission to investigate and outlaw the unfortunately common practice of cash-rich companies playing corporate shell games and weaponizing federal bankruptcy laws to avoid paying the victims they’ve hurt and misled.”

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