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Talc Plaintiffs Will Press to Reopen Courthouse Doors

JNJ | March 22, 2023

In denying Motion for Rehearing, Third Circuit affirms J&J's 'Texas Two-Step' bankruptcy
was not filed in good faith

PHILADELPHIA, March 22, 2023 /PRNewswire/ -- The U.S. Court of Appeals for the Third Circuit has denied a request for a rehearing of the LTL bankruptcy petition, signaling a move to reopen litigation against Johnson & Johnson (NYSE:JNJ) based on claims that the company's talcum powder products are linked to ovarian cancer and mesothelioma.

Once the Third Circuit issues a mandate, likely within days, attorneys anticipate swift action by state courts as well as the federal court handling the multidistrict litigation involving talc cases to resume litigation in more than 38,000 claims that have been held up by an injunction issued by the bankruptcy court. A significant number of new lawsuits – barred while the injunction was in place – are also expected to be filed.

"Finally, our clients will have the opportunity to present evidence to a jury that J&J knowingly exposed women to asbestos, talc fibers, and other known carcinogens through its talc products," says Leigh O'Dell, of the Beasley Allen Law Firm, who co-chairs the plaintiffs steering committee in the Talc MDL. "The evidence is strong and so is our commitment to finally achieve justice."

A November 2021 injunction by U.S. Bankruptcy Judge Michael B. Kaplan paused all talc litigation based on J&J's use of a Texas bankruptcy process known as the Texas Two-Step. By exploiting the Texas statute, J&J attempted to consolidate all talc litigation liabilities in a shell corporation that immediately filed for bankruptcy. If successful, the ploy would have shielded billions of dollars in assets of its consumer division and corporate parent while severely limiting the ability of cancer victims to obtain justice.

In January, a three-member panel of the Third Circuit ruled that the bankruptcy of J&J's shell subsidiary, LTL, was not filed in good faith, that LTL was not in financial distress deserving bankruptcy protection, and that the bankruptcy petition should be dismissed.

"The bankruptcy was a sham. So is the company's claim that it's seeking a fair and equitable resolution of these claims," Ms. O'Dell says. "At every step, Johnson & Johnson has tried to intimidate women into accepting pennies on the dollar as compensation for the harm they've suffered."

J&J's Texas Two-Step ploy immediately drew fire from legal scholars and members of Congress. It also prompted an outpouring of outrage from talc victims who were blocked from seeking their day in court. Nearly 200 plaintiffs expressed their indignation on video.

Earlier this year, Johnson & Johnson announced a halt to future sales and distribution of talc-based products worldwide, citing the legal claims brought by ovarian cancer and mesothelioma victims. Numerous scientific studies spanning decades have established the carcinogenic effects of cosmetic talc, while U.S. and Canadian regulators have called for enhanced testing techniques for products containing the mineral, particularly after independent testing by the U.S. Food & Drug Administration revealed asbestos in consumer samples of talc-based powders.

About Beasley Allen Law Firm
Headquartered in Montgomery, Alabama, BeasleyAllen is comprised of more than 70 attorneys and 200 support staff. One of the largest Plaintiffs law firms in the country, BeasleyAllen is a national leader in civil litigation, with verdicts and settlements in excess of $26 billion. BeasleyAllen was one of only 12 firms in the nation named by Law360 to its Most Feared Plaintiffs Firms list in 2015, and the firm was included on the National Law Journal Midsize Law Firm Hot List and the NLJ Elite Trial Lawyers List in 2014. For more information about our firm, please visit our website at www.beasleyallen.com.