Johnson & Johnson proposes $8.9bn talc settlement

Johnson & Johnson has proposed an $8.9bn settlement to resolve tens of thousands of lawsuits alleging its talcum powder caused cancer, in an attempt to resolve long-running litigation that has weighed on the healthcare products company.

The proposed deal follows a decade-long legal battle between plaintiffs’ lawyers and J&J. If approved, it would become the largest product liability settlement in bankruptcy history, according to lawyers involved in the case.

It follows an appeals court ruling in January that shot down J&J’s attempt to implement a complex bankruptcy scheme called the “Texas-two step” to manage the talc claims. Under this strategy J&J had created a $2bn fund to compensate victims.

LTL, the unit created by J&J to house the talc claims, would once again file for bankruptcy in order to facilitate the settlement, the company said.

J&J said it continued to believe the claims were “specious and lack scientific merit” and the settlement was not an admission of wrongdoing. But it said resolving the cases in the civil court system would take decades and impose significant costs on the company.

“Resolving this matter through the proposed reorganisation plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner, and enables the company to remain focused on our commitment to profoundly and positively impact health for humanity,” Erik Haas, J&J’s worldwide vice-president of litigation, said in a statement.

The draft deal could draw a line under one of the most bitterly fought product liability suits in US history, involving tens of thousands of users of J&J’s baby talc who allege it cased their cancers.

About a dozen law firms representing about 70,000 claimants said they supported the draft deal and were confident it would secure sufficient support to win approval in the bankruptcy court.

“This settlement is a testament to the tens of thousands of women who have battled both cancer and the court system to achieve justice for themselves,” said Alicia O’Neill of Watts Guerra, one of the firms representing plaintiffs. “These strong women have ensured that no other woman will be exposed to this unnecessary danger. They deserve compensation and closure.” 

Carl Tobias, professor of law at University of Richmond, said J&J’s strategy of using the Chapter 11 again to try and resolve the cases through a global settlement appeared risky given the decisive dismissal of its earlier bankruptcy by the appeals court.

Jon Ruckdeschel, a trial lawyer who has been representing victims of mesothelioma for more than 20 years, said he was sceptical of J&J’s strategy to re-file for bankruptcy. He represents talc plaintiffs, but said he has not yet decided to accept the latest offer.

“Neither Johnson & Johnson, nor any of its subsidiaries are in any financial distress. I am confident that the courts will quickly and assertively reject this latest bad faith manipulation of the bankruptcy courts,” he said.