J&J Adds $1.1 Billion to Proposed Talc Settlement Fund

J&J Adds $1.1 Billion to Proposed Talc Settlement Fund

Introduction

Johnson & Johnson plans to add $1.1 billion to its settlement fund to resolve thousands of legal claims alleging that its baby powder and other talc-based products caused cancer.

This increase would bring the total settlement amount to more than $9 billion, to be paid out over 25 years. The company reached an agreement with a plaintiffs' lawyer representing 12,000 clients, who will recommend the settlement to them. This adds to the support J&J has already received from other claimants.

J&J is preparing to have a subsidiary file for bankruptcy to finalize the settlement plan by the end of the month, while the company itself will continue operations without filing for Chapter 11. J&J maintains that its talc products are safe and do not cause cancer. The timing of the bankruptcy filing may change depending on the ongoing vote count from claimants.

The lawyer supporting the settlement deal agreed to recommend it to clients in exchange for "additional monetary and non-monetary benefits" for all talc claimants. J&J has not disclosed the exact amount of the additional payment, nor has it commented on the timeline for its subsidiary's bankruptcy filing.

Earlier this summer, J&J gave talc claimants until July 26 to vote on the proposed settlement. The deadline was extended in August at the request of plaintiffs' lawyers. J&J believes that the current settlement offer is the best and most realistic option for claimants to receive compensation in a timely manner, according to a statement from the plaintiffs' lawyer.

The company expects to secure support from more than 75% of claimants who allege its talc products caused their illnesses, which is the legal threshold required for a judge to approve a bankruptcy settlement. J&J believes that additional votes will push its support "well above" the necessary level.

J&J is facing lawsuits from over 62,000 plaintiffs, though the total number of claimants, including those who haven’t filed lawsuits, could be as high as 100,000. However, some lawyers representing cancer victims continue to oppose J&J's settlement plan and are fighting the company in court.

One prominent opponent stated that many of his firm’s clients, who are part of a joint representation agreement, have already rejected J&J's offer and will continue to challenge the proposed bankruptcy settlement.

J&J previously described the settlement offer as having a net present value of around $6.48 billion, with actual cash payments over 25 years totaling $8 billion. The company’s latest increase would push the total payout to over $9 billion.

This marks J&J’s third attempt to settle the talc litigation using a legal strategy known as the "Texas two-step" bankruptcy. This maneuver involves transferring its talc liability to a newly created subsidiary, which would then declare Chapter 11 bankruptcy. The goal is to consolidate all claims into one settlement without requiring J&J itself to file for bankruptcy.

The current settlement offer addresses claims that talc products caused ovarian and other gynecological cancers, which make up the majority of the cases. However, it does not cover claims from plaintiffs alleging that asbestos-contaminated talc caused mesothelioma, a deadly cancer affecting the lining of organs. J&J asserts that its talc products do not contain asbestos.