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Johnson & Johnson talc bankruptcy attacked by cancer plaintiffs as ‘rotten’


Feb 14 (Reuters) – A Johnson & Johnson (JNJ.N) subsidiary got here below assault in court docket on Monday for making an attempt to make use of the chapter course of to resolve tens of 1000’s of claims that its child powder and different talc-based merchandise triggered most cancers.

The subsidiary, LTL Administration, is preventing to stay in chapter, arguing that’s one of the simplest ways to succeed in an “equitable, environment friendly, and consensual decision” of greater than 38,000 claims alleging that J&J’s talc-based merchandise triggered cancers together with mesothelioma.

“At its core, this case is rotten,” Jeffrey Jonas, a lawyer for one of many plaintiffs’ committees stated throughout Monday’s opening arguments.

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J&J maintains that its client talc merchandise are secure.

“There was no try on this case to ‘slough off’ legal responsibility,” LTL wrote in December court docket papers.

J&J used a authorized maneuver generally known as the “Texas two-step,” which permits corporations to separate in two via a so-called divisive merger, with one a part of the corporate protecting helpful belongings whereas the opposite is saddled with liabilities.

The technique, whereas hardly ever used, might be adopted extra extensively by massive corporations dealing with legal responsibility if J&J will get bankruptcy-court approval, in keeping with attorneys for talc plaintiffs, in addition to some authorized consultants.

J&J’s chapter technique was criticized by some lawmakers throughout a Feb. 8 U.S. Senate listening to. Sheldon Whitehouse, a Democrat and chair of Senate Judiciary subcommittee on federal courts, expressed concern that different corporations would possibly observe in J&J’s footsteps and use “a chapter trick to shirk duty for hurting People.”

Democratic lawmakers within the Home of Representatives in July 2021 proposed a invoice that may block the maneuver.

U.S. Chapter Choose Michael Kaplan in New Jersey, who took over the LTL case in November when it was transferred from North Carolina, has scheduled a five-day trial to contemplate a bid by committees representing the plaintiffs to dismiss the chapter case. Kaplan has stated he intends to resolve whether or not or to not dismiss the chapter case earlier than the tip of the month.

NO ‘FINANCIAL DISTRESS’

Attorneys for the plaintiffs argue that permitting the LTL chapter to proceed would unfairly cap the payout on the $2 billion that J&J has proposed to make obtainable for individuals who have been harmed.

Brian Glasser, an lawyer who represents mesothelioma claimants, stated on Monday that J&J settled 6,846 talc circumstances for $966 million earlier than deciding to push these authorized dangers into LTL.

If J&J reached comparable settlements in the entire 38,000 talc circumstances pending towards it, the corporate would have about $5.5 billion in legal responsibility, which might not trigger “monetary misery” to an organization of J&J’s measurement, Glasser stated.

“Simply because Johnson & Johnson is each wealthy, and petrified of reputational hurt, doesn’t give it a proper to decide out of the jury system,” Glasser stated.

LTL has stated in court docket filings that chapter is a authorized and applicable response to an unpredictable and “doubtlessly financially ruinous” wave of lawsuits.

“To litigate the identical claims over an over within the tort system is a whole waste,” Greg Gordon, a lawyer for LTL, instructed the court docket.

Shares of J&J had been down 1.8% at $164.66.

Earlier than J&J cut up off LTL, it confronted $3.5 billion in verdicts and settlements, together with one through which 22 girls had been awarded a judgment of greater than $2 billion, in keeping with chapter court docket information.

The talc lawsuits have been quickly halted whereas J&J, which has a market worth exceeding $446 billion, awaits the end result of the LTL chapter proceedings.

On Feb. 4, Reuters reported that J&J secretly launched “Venture Plato” final yr to shift legal responsibility from its pending talc lawsuits to the newly created subsidiary, which was then to be put into chapter 11.

A 2018 Reuters investigation discovered that J&J knew for many years that hint quantities of asbestos lurked in its Johnson’s child powder and different beauty talc merchandise. Asbestos is a identified carcinogen that has been linked to mesothelioma.

The corporate stopped promoting its child powder in the US and Canada in Might 2020, partially because of what it known as “misinformation” and “unfounded allegations” in regards to the talc-based product.

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Reporting by Dietrich Knauth; Further reporting by Tom Hals in Wilmington, Del.; Enhancing by Noeleen Walder and Invoice Berkrot

Our Requirements: The Thomson Reuters Belief Rules.

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