Third Circuit Ruling Reopens Courthouse Doors for Talc-Asbestos Claims

Rhea-AI Summary

The U.S. Court of Appeals for the Third Circuit has ruled that Johnson & Johnson's (NYSE: JNJ) bankruptcy filing of its subsidiary, LTL, was not in good faith and dismissed the bankruptcy petition. This ruling allows approximately 38,000 talc-related lawsuits to proceed, alleging that J&J knowingly sold products tainted with asbestos, linked to ovarian cancer. The injunction, previously halting these cases since November 2021, will be lifted, allowing trials to commence. J&J has halted sales of talc-based products globally due to these legal challenges. The decision has led to discussions in Congress about potential changes to bankruptcy laws to address similar strategies in the future.

Positive

• Court ruling allows 38,000 lawsuits to proceed, potentially clarifying liability.
• Lifting of the injunction may expedite resolution for affected plaintiffs.

Negative

• Bankruptcy strategy deemed not filed in good faith, undermining J&J's legal tactics.
• Continued legal exposure related to carcinogenic allegations against talc products.

Beasley Allen Law Firm: Controversial J&J bankruptcy ploy returned to lower court for further consideration

PHILADELPHIA, Jan. 30, 2023 /PRNewswire/ -- Thousands of women and family members whose talc-related legal cases against health care giant Johnson & Johnson (NYSE: JNJ) have been on hold for a year can move forward now, following a ruling today by the U.S. Court of Appeals for the Third Circuit.

In its ruling, the court found 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 the bankruptcy petition should be dismissed. This decision will result in the lifting of an injunctive stay that had put on hold 38,000 legal cases while the health care giant pursued a strategy centered around bankruptcy.

The opinion dismantles the federal bankruptcy court rulings supporting the injunction and will allow plaintiffs to move forward with lawsuits alleging that the company knew for years that its Johnson's Baby Powder and Shower to Shower products were potentially contaminated with carcinogenic asbestos. Evidence produced during years of trials shows the company repeatedly denied or covered up the scientific evidence of the association of the product to ovarian cancer. 

The injunction, issued in November 2021, had stopped all litigation based on J&J's use of a bankruptcy strategy known as the "Texas Two-Step" to consolidate all talc litigation liabilities in a shell corporation, protecting billions of dollars in assets of its consumer division and corporate parent. While today's ruling was critical of the strategy, the court remanded the case to federal bankruptcy court in New Jersey for dismissal.

"This is a landmark ruling that clearly upholds the Seventh Amendment's right to a jury trial and confirms that every individual has the right to pursue a claim through the tort system," says Leigh O'Dell of the Beasley Allen Law Firm, which represents several thousand ovarian cancer victims. "With the bankruptcy to be dismissed and the resulting stay lifted, we will immediately seek to efficiently schedule and conduct trials in state and federal courts, and establish the liability of Johnson & Johnson for the deaths and disease suffered by thousands of women." 

The "Texas Two-Step" strategy has raised eyebrows in Congress, where representatives have begun discussing potential changes to the bankruptcy laws that would prevent this sort of legal strategy and the associated consumer harm in future cases.

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 governmental 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, Beasley Allen is comprised of more than 70 attorneys and 200 support staff. One of the largest Plaintiffs law firms in the country, Beasley Allen is a national leader in civil litigation, with verdicts and settlements in excess of $26 billion. Beasley Allen 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.

Media Contact:
Barry Pound
800-559-4534
barry@androvett.com

 

View original content:https://www.prnewswire.com/news-releases/third-circuit-ruling-reopens-courthouse-doors-for-talc-asbestos-claims-301733773.html

SOURCE Beasley Allen Law Firm

FAQ

What was the recent ruling about Johnson & Johnson's bankruptcy strategy?

The U.S. Court of Appeals ruled that J&J's bankruptcy filing was not in good faith, allowing 38,000 talc-related lawsuits to proceed.

How does the Third Circuit ruling affect talc-related lawsuits against JNJ?

The ruling lifts an injunction and permits plaintiffs to move forward with their lawsuits alleging asbestos contamination.

What impact does the ruling have on Johnson & Johnson's legal strategies?

The ruling undermines J&J's previous bankruptcy strategy, prompting potential changes to bankruptcy laws.

When did the Court's ruling on JNJ's bankruptcy occur?

The ruling was made on January 30, 2023.

What are the implications for JNJ's talc-based products after the ruling?

The ruling follows JNJ's halt of talc product sales due to ongoing legal claims related to cancer.