Lawyers for Johnson & Johnson’s Ovarian Cancer Victims React to SCOTUS Decision in Purdue

Rhea-AI Summary

The U.S. Supreme Court has denied Purdue Pharmaceuticals' $7 billion bankruptcy plan, which sought to grant the Sackler family immunity from further liability for their role in the opioid crisis. This decision has significant implications for Johnson & Johnson (NYSE:JNJ), which is attempting to use bankruptcy protection to resolve tens of thousands of ovarian cancer claims related to its talc-based products.

The Beasley Allen Law Firm, representing the plaintiffs in the talc/ovarian cancer multidistrict litigation (MDL), believes this ruling undermines J&J's similar attempts to use bankruptcy as a shield. The court's decision reinforces that financially solvent entities cannot use bankruptcy to escape liability for marketing and manufacturing dangerous products.

This ruling could derail J&J's efforts to return the talc litigation to bankruptcy courts, potentially moving forward with trials that support the plaintiffs' constitutional rights and address the substantial financial and emotional toll suffered by J&J’s victims.

Positive

• None.

Negative

• The Supreme Court's decision against Purdue Pharmaceuticals' bankruptcy plan may negatively impact J&J's attempts to use bankruptcy protection to resolve ovarian cancer claims.
• This ruling could result in J&J facing numerous trials, increasing legal expenses and potential liabilities.
• J&J’s continued use of talc-based products in the face of mounting evidence of harm may damage its public image and trust among consumers.

Insights

Legal Expert

The Supreme Court's recent ruling against Purdue Pharmaceuticals’ bankruptcy plan has significant implications for Johnson & Johnson (JNJ). The decision underscores that financially solvent entities cannot use bankruptcy courts to shield themselves from liability. This is particularly relevant to J&J’s ongoing efforts to use bankruptcy laws to address numerous ovarian cancer claims linked to its talc-based products. The ruling effectively blocks J&J's potential strategy to avoid financial and legal repercussions by seeking bankruptcy protection, a tactic seen as unfair and unprincipled by many. The implications are far-reaching, as it forces J&J to confront litigations head-on, potentially leading to massive financial liabilities. This decision may also prompt other corporations to reconsider using bankruptcy as a shield from liability, establishing a precedent for future cases.

Financial Analyst

From a financial perspective, the Supreme Court's ruling against Purdue Pharmaceuticals complicates J&J's financial outlook. The company's attempt to mitigate liabilities through bankruptcy has been thwarted, leaving it exposed to significant legal costs associated with ongoing and future litigation. This ruling could potentially lead to billions of dollars in settlements and legal fees, adversely affecting J&J's balance sheet. Investors should be wary of the long-term financial strain, as J&J might need to set aside larger reserves to cover these liabilities. The decision could also negatively impact J&J's stock price in the short term due to increased uncertainty and the potential for substantial payouts.

Market Research Analyst

For retail investors, this ruling introduces a layer of uncertainty into J&J's market position. The company has historically been viewed as a stable, blue-chip stock, but the inability to leverage bankruptcy protection against substantial legal claims could erode investor confidence. Investors might start questioning J&J's risk management strategies and its ability to handle large-scale legal challenges without impacting its core business operations. This decision could also lead to increased scrutiny from regulators and affect J&J's reputation, potentially impacting its market valuation and investor sentiment.

Beasley Allen: ‘We believe this decision should spell doom for J&J’s third bankruptcy plan’

WASHINGTON--(BUSINESS WIRE)-- The U.S. Supreme Court has denied a $7 billion Purdue Pharmaceuticals bankruptcy plan which would have given the Sackler family, which founded the company, immunity from additional liability for their irresponsible actions in promoting the deadly use of opioids to the public and physicians.

The Sackler family had agreed to provide up to $6 billion in funding in exchange for immunity from further legal action while protecting billions in other assets. But the court ruled 5-4 that bankruptcy law does not permit that kind of protection.

The decision has significant implications for ongoing efforts by Johnson & Johnson (NYSE:JNJ) to seek bankruptcy protection in an effort to resolve tens of thousands of ovarian cancer claims tied to the use of the company’s talc-based products, including the Johnson’s Baby Powder and Shower to Shower brands.

In response, the following is a statement from Leigh O’Dell of the Beasley Allen Law Firm and Co-Chair of the Plaintiffs’ Steering Committee in the Talc/Ovarian Cancer MDL in New Jersey Federal Court.

“We believe this decision should spell doom for J&J’s third bankruptcy plan. Today’s ruling affirms that financially solvent entities, or individuals, cannot use the bankruptcy courts as a shield to escape liability for marketing and manufacturing dangerous products.

“The parallels of this case with J&J’s continued and unsuccessful attempts to use the bankruptcy laws to mirror the fraud perpetrated by the Sackler family cannot be denied. Even with an overwhelming majority of creditors approving the Sacklers’ indemnification scheme, the principles of fundamental fairness -- that it is the debtor who may receive the benefits of bankruptcy not other wrongdoers (such as the Sacklers or J&J) -- have been upheld.

“We hope that this decision provides clarity to the controversy that resulted in rampant forum shopping by companies and inconsistent administration of the code by the courts. We also hope that this decision will derail any attempt by J&J to return the talc litigation to the bankruptcy courts, and we can continue to move forward with trials that support the constitutional rights of our clients and resolutions that consider the true financial and emotional toll suffered by thousands of J&J’s victims.

“J&J’s response to today’s Supreme Court ruling in the Sackler case reveals a half-trillion-dollar company still desperate to use bankruptcy as a shield to protect itself from the tens of thousands of women who have cancer only because they used Johnson’s Baby Powder or Shower to Shower. It won’t work.

“Despite mountains of evidence to the contrary, J&J continues to mislead juries and members of the public by claiming talc-based baby powder doesn’t contain asbestos. Yet, at the same time, J&J seeks the shelter of a bankruptcy escape hatch that Congress designed exclusively for asbestos-containing products. They can’t have it both ways. It’s time for J&J to abandon its hysterical, bullying, and untruthful rhetoric and act as a responsible corporation.”

View source version on businesswire.com: https://www.businesswire.com/news/home/20240627982671/en/

Mike Androvett

800-559-4534

mike@androvett.com

Source: Beasley Allen

FAQ

What was the result of the Supreme Court's decision on Purdue Pharmaceuticals' bankruptcy plan?

The U.S. Supreme Court denied Purdue Pharmaceuticals' $7 billion bankruptcy plan, which would have granted the Sackler family immunity from further liability.

How does the Supreme Court's decision on Purdue Pharmaceuticals affect Johnson & Johnson (JNJ)?

The decision undermines J&J's attempts to use bankruptcy protection to resolve ovarian cancer claims related to its talc-based products.

What legal challenges does J&J (JNJ) face following the Supreme Court's ruling on the Purdue case?

J&J may face increased legal expenses and numerous trials related to ovarian cancer claims, as the ruling could derail efforts to resolve these claims through bankruptcy protection.

What implications does the Supreme Court's decision have for J&J's (JNJ) talc litigation?

The ruling may move the talc litigation forward with trials, potentially conflicting with J&J’s plans to use bankruptcy courts to resolve the claims.

Why is the Supreme Court's decision significant for J&J (JNJ) shareholders?

The decision may lead to financial and reputational risks for J&J, increasing the company's legal expenses and potential liabilities from ovarian cancer claims.