Federal Appellate Court Rejects Controversial J&J Ploy to Dodge Talc Cancer Lawsuits

Rhea-AI Summary

The U.S. Court of Appeals for the Third Circuit has rejected Johnson & Johnson's (NYSE: JNJ) bankruptcy strategy aimed at dismissing over 38,000 lawsuits from women with ovarian cancer linked to its talc-based products. This ruling allows victims to seek justice, challenging J&J's claims of financial distress. The court found that the shell company LTL Management, created by J&J to file for bankruptcy, is financially solvent with a $60 billion safety net to cover liabilities. As thousands of lawsuits are set to resume, legal experts suggest J&J's liability could exceed the allocated amount.

Positive

• None.

Negative

• Potential liability exceeding $60 billion due to the resumption of thousands of lawsuits.
• Increased scrutiny and accountability for J&J's practices related to talc-based products.

Nachawati Law Group: Ovarian cancer victims deserve day in court

PHILADELPHIA, Jan. 30, 2023 /PRNewswire/ -- Trial lawyers with the Nachawati Law Group praised a ruling by the U.S. Court of Appeals for the Third Circuit rejecting Johnson & Johnson's (NYSE: JNJ) use of a controversial bankruptcy ploy to shed more than 38,000 lawsuits filed by women who developed ovarian cancer after using J&J's talc-based products.

The Jan. 30 ruling means J&J can be held accountable for its failure to warn consumers about known cancer risks associated with talc-based products like Johnson's Baby Powder, said trial lawyer Majed Nachawati, founder of Dallas-based Nachawati Law Group. 

The Nachawati Law Group represents numerous women who have been diagnosed with ovarian cancer after years of using Johnson's Baby Powder and other talc products produced by the company.

"Our clients are grateful that the appellate court saw through this cynical attempt by J&J to avoid responsibility," said Mr. Nachawati. "We will press forward to ensure that jury trials resume, and these women can have the opportunity for justice they deserve."

In 2021, J&J transferred the lawsuits and jury verdicts to a shell company known as LTL Management. Using a Texas law known as the "Texas Two-Step," LTL briefly incorporated in Texas before quickly filing for bankruptcy. The move sparked controversy because – if successful – it would have allowed a profitable corporation to use bankruptcy law to avoid accountability in the civil justice system.

"It's plain and simple; Profitable corporations like Johnson & Johnson should not be allowed to use bankruptcy laws to avoid accountability," Mr. Nachawati said.

The appellate ruling found that LTL is "highly solvent" and not entitled to file Chapter 11 bankruptcy because J&J had provided it with a $60 billion funding "safety net" to meet its talc liabilities. Judge Thomas Ambro, writing for the appellate panel, said that injured claimants' rights to a jury trial should be "disrupted only when necessary."

With thousands of lawsuits set to resume, Mr. Nachawati said J&J's liability could exceed the $60 billion it had set aside for the LTL bankruptcy.

Nachawati Law Group represents individuals in mass-tort litigation, businesses and governmental entities in contingent litigation, and individual victims in complex personal injury litigation. One of the largest and most diverse products liability law firms in the nation, Nachawati Law Group was ranked No. 1 nationally in products liability filings in federal court over the past three years, according to Lex Machina. For more information visit http://www.ntrial.com/.   

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SOURCE Nachawati Law Group

FAQ

What did the U.S. Court of Appeals rule regarding Johnson & Johnson on January 30, 2023?

The court rejected Johnson & Johnson's attempt to use bankruptcy to avoid over 38,000 lawsuits related to ovarian cancer claims.

How could Johnson & Johnson's liability change after the court ruling?

J&J's liability could exceed the $60 billion it had set aside for the LTL bankruptcy due to the resumption of lawsuits.

What are the implications of the ruling for ovarian cancer victims and JNJ stockholders?

The ruling allows ovarian cancer victims to pursue justice, potentially impacting JNJ's financial outlook and share performance.