J&J Nears $6.48 Billion Settlement in Talc Lawsuits, Plans Bankruptcy Filing

Johnson & Johnson, the renowned healthcare giant, is on the brink of a significant development in its ongoing talc litigation saga. The company is preparing to disclose widespread support for a $6.48 billion settlement offer, aimed at resolving tens of thousands of legal actions alleging its talc products caused cancer.

According to sources familiar with the matter, J&J plans to reveal that 75% or more of claimants have voted in favor of a bankruptcy settlement. This level of support is crucial, as it meets the legally required threshold for a judge to approve the proposed settlement. The company is eyeing a potential announcement as early as August 16, 2024, with plans to initiate a subsidiary bankruptcy filing the following week.

The scale of this litigation is substantial, with J&J facing talc lawsuits from over 62,000 plaintiffs. However, when accounting for potential claimants who haven't filed suits, the figure could reach up to 100,000, according to Erik Haas, J&J's global vice president of litigation.

This settlement attempt marks J&J's third try at a "Texas two-step" bankruptcy maneuver. The strategy involves creating a new subsidiary to absorb talc-related liabilities, which then declares Chapter 11 bankruptcy. Previous attempts in New Jersey were rejected by courts, citing a lack of "financial distress" required for Chapter 11 protection.

J&J's current plan differs from previous attempts in several key aspects. It addresses allegations that talc caused ovarian and other gynecological cancers, which constitute the majority of claims. Notably, it excludes claims alleging asbestos-laced talc caused mesothelioma, a rare and aggressive cancer.

"We cannot comment until the vote is certified."

It's worth noting that J&J maintains its talc products are safe and do not cause cancer. The company has a long history with talc products, having introduced its iconic Baby Powder in 1894. However, talc-related controversies have persisted since the 1970s, leading to the company's decision in 2020 to discontinue talc-based baby powder sales in North America.

J&J's pursuit of a Chapter 11 settlement aims to achieve a global resolution that would permanently halt all related lawsuits and prevent new ones, all for a capped payout. This approach contrasts with the trial-court system, where individual settlements could leave the company vulnerable to future litigation and potentially massive verdicts.

While J&J has won most cases that have gone to trial, it has faced significant losses, including a $2.1 billion verdict in Missouri for ovarian-cancer victims. These high-stakes outcomes have driven the company's strategy to seek a comprehensive settlement through bankruptcy proceedings.

As this legal saga unfolds, it's important to remember that J&J is a global healthcare leader operating in over 60 countries. Founded in 1886, the company has a rich history of innovation in medical devices, pharmaceuticals, and consumer health products. Its response to this litigation will likely have far-reaching implications for both the company and the thousands of claimants seeking resolution.