J&J To Take Texas Two-step Case To US Supreme Court

J&J To Take Texas Two-step Case To US Supreme Court

Introduction

Following an unsuccessful bid to have its appeal reheard in the Third Circuit Court, Johnson & Johnson (J&J) announced that it will make one final appeal to the Supreme Court to legitimize its strategy of funneling over 38,000 talc lawsuits into a company it created with the intent of declaring it bankrupt.

J&J is facing allegations that its talcum powder products, particularly its well-known baby powder, cause cancer. After allocating the cases to a company named LTL Management and applying for bankruptcy protection, J&J designated corporate cash for LTL to address the claims en masse.

According to a J&J spokesperson, the ruling disregards the facts established during the Bankruptcy Court's trial regarding the appropriateness of LTL Management's (LTL) formation and filing, as well as the company's intention to resolve the cosmetic talc litigation efficiently for the benefit of all parties, including current and future claimants. The corporation will immediately seek a stay of this ruling to seek direct review from the United States Supreme Court.

Throughout the proceedings, the business has maintained that its talc products are safe and devoid of asbestos. J&J pulled its baby powder from stores in North America in 2020 and will cease global sales this year. Instead, the firm has gone with cornflour.

Companies have utilized the legal maneuver known as the Texas two-step to settle asbestos litigation. J&J established LTL in Texas in 2021 and relocated it to North Carolina before filing for bankruptcy. The litigation has been halted for 17 months as a result of this strategy. J&J made a $2 billion offer to settle the lawsuits in 2022, although a corporate lawyer at the time stated that the firm may increase its offer.

In January, the U.S. Circuit Court of Appeals in Philadelphia rejected the complaint, stating that J&J and LTL were not in financial hardship. A three-judge panel unanimously denied LTL's en banc petition to hear the matter again.

J&J's talc litigation has had varied results, with the company winning some cases, losing others, and settling others. In Missouri, more than 20 women were awarded $4.69 billion in 2018, a figure that was eventually lowered to $2.1 billion following appeals. J&J also pursued the issue to the Supreme Court, where it was rejected in 2021.