Johnson & Johnson’s third effort to end lawsuits claiming its baby powder caused cancer in thousands of women should be dismissed because violates U.S. Supreme Court precedent and defeats the purpose of the U.S. bankruptcy system, creditors said in court papers.
Healthcare giant can’t force women with ovarian cancer to join proposed $8 billion settlementunder a ruling earlier this year by the United States’ highest court, argued lawyers who have long fought J&J.
In June, the justices voted 5-4 to reject drugmaker Purdue Pharma’s attempt to force a $6 billion settlement those opposed to a settlement that would have ended years of addiction lawsuits related to the opioid epidemic.
The company will be in court Monday afternoon seeking to halt all legal action outside of a Chapter 11 bankruptcy case filed last week by Red River Talc, the unit J&J created to dismiss tens of thousands of lawsuits claiming its baby powder once contained talc contaminated with toxic substances.
Most of the more than 62,000 baby powder cancer lawsuits filed so far have been assembled before a federal judge in New Jersey for pretrial information exchange. Red River attorneys will attempt to put those cases on hold while the bankruptcy case is resolved.
The new bankruptcy case is J&J’s latest attempt to use special bankruptcy rules that allow corporations facing financial trouble to force an end to all product liability lawsuits.
The rules require the company to win more than 75 percent of votes from alleged victims and to create a trust fund to pay claims. In exchange, all current and future lawsuits would be channeled through the trust, rather than being taken to trial and decided by juries.
Johnson & Johnson says it has overwhelming support for the roughly $8 billion deal. Because 83 percent of the alleged victims voted in favor of the settlement, Red River Talc qualifies for the special rules, the company argues.
The same lawyers who successfully defeated J&J’s first two attempts to file for bankruptcyThey have asked Judge Christopher Lopez to dismiss the new case as well.
Opponents, including attorneys from the law firms Brown Rudnick LLP and Otterbourg PC, also claim that J&J manipulated the victims’ vote by including women with gynecological cancers. that cannot be linked to contaminated baby powder.
The company “bought the votes of the holders of these negative value and non-compensable claims by offering a Quickpay payment of $1,500,” the holdouts said in a court filing.
The Purdue ruling does not bar Johnson & Johnson from filing for bankruptcy because the baby powder lawsuits involve alleged asbestos poisoning. Decades ago, U.S. lawmakers added rules to the bankruptcy code to help companies facing asbestos lawsuits.
Those rules have been upheld by the U.S. Supreme Court and may benefit Johnson & Johnson, the company said in a statement.
The company also refuted claims that the vote was flawed and called the accusations “false.”
Over the past 15 years, juries have awarded billions of dollars in damages to people who blame J&J dust for deadly cancers like ovarian cancer and mesothelioma. Some of those verdicts were later overturned on appeal. The company has struggled to reach a global settlement with some victims and end the lawsuits.
J&J has maintained that its talc-based powders have never caused cancer and that it appropriately marketed its now-recalled baby powder for more than 100 years. Last year, the company discontinued the talc-based version of the product and replaced it with a cornstarch-based substitute worldwide.
The bankruptcy case is Red River Talc LLC, 24-90505, U.S. Bankruptcy Court for the Southern District of Texas (Houston).
