Johnson & Johnson (J&J) is set to pay an additional $1.1 billion to resolve tens of thousands of lawsuits alleging that its talc-based baby powder and other products caused cancer, according to sources familiar with the matter. This new payment brings the total settlement amount to over $9 billion, which will be paid over the course of 25 years.
J&J has reached an agreement with a lawyer representing 12,000 plaintiffs, recommending the settlement offer to his clients. This adds to the existing support the company has already garnered from other claimants. The healthcare giant is now preparing for a subsidiary to declare bankruptcy as a strategic move to finalize the settlement plan. Despite this, J&J itself will continue its operations without filing for Chapter 11 bankruptcy.
The Increasing Legal Pressure on J&J
J&J’s talc products, most notably its baby powder, have been at the center of mass litigation for several years. Plaintiffs allege that prolonged use of these products led to various forms of cancer, particularly ovarian and gynecological cancers. The cases claim that asbestos, a known carcinogen, was present in the talc used by the company, although J&J has consistently denied these allegations, maintaining that its talc products are safe and do not cause cancer.
The additional $1.1 billion payment is a significant increase in the company’s financial commitment to resolving the litigation. With this increased offer, J&J aims to secure the support of more than 75% of the claimants, the threshold required for a judge to approve the kind of bankruptcy settlement J&J is pursuing.
J&J previously gave talc claimants until July 26 to vote on its proposed settlement, but later extended the deadline into August at the request of plaintiffs’ lawyers, including Allen Smith, a prominent attorney now supporting the settlement. Smith stated that the current offer represents the best chance for claimants to recover their claims promptly.
Opposition and Divided Legal Camps
While J&J is hopeful that the new settlement offer will win the necessary majority of support, not all plaintiffs’ lawyers are on board. Andy Birchfield, a leading attorney opposing the plan, represents a “substantial number” of clients alongside Smith in a joint agreement. According to Birchfield, his clients have “overwhelmingly rejected” J&J’s settlement offer, and he has vowed to continue fighting against the company’s bankruptcy plan in court.
This division among the plaintiffs’ legal teams highlights the complex nature of the settlement negotiations, as well as the bitter legal battle that J&J faces. Birchfield’s opposition, along with other attorneys, could slow down the resolution process if they are able to block the settlement from receiving the necessary approval in court.
The Texas Two-Step Bankruptcy Strategy
The talc litigation has already rebuffed J&J’s attempts to resolve the cases in federal courts twice. However, the company is now employing a legal strategy known as the “Texas two-step” bankruptcy. This tactic involves J&J transferring its talc liabilities to a newly created subsidiary, which then files for Chapter 11 bankruptcy. The goal is to consolidate all claims into one comprehensive settlement without forcing J&J itself to file for bankruptcy.
J&J hopes this approach will allow for a quicker and more efficient resolution to the tens of thousands of lawsuits, without dragging the company into long-term legal uncertainty or financial instability.
Scope of the Settlement and Exclusions
J&J’s latest settlement offer primarily addresses claims related to ovarian and other gynecological cancers, which make up the bulk of the cases filed against the company. However, it notably excludes certain other claims, such as those alleging that asbestos-laced talc caused mesothelioma—a rare and deadly cancer affecting the lining of internal organs. J&J has consistently stated that its talc products do not contain asbestos and has vigorously defended itself against these claims.
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The company declined to comment on the exact amount of additional money it plans to pay or the timeline for when its subsidiary will file for bankruptcy protection. However, sources indicate that J&J expects to meet the necessary vote threshold to move forward with the bankruptcy plan and ultimately settle the litigation.
Looking Forward
If the settlement is approved, it would mark a significant step forward in one of the largest mass tort litigations in recent U.S. history. J&J faces claims from more than 62,000 plaintiffs, with the number potentially rising as high as 100,000 when including those who have not yet filed lawsuits. The company’s global vice president of litigation, Erik Haas, has described the settlement as the best option available for claimants to recover their claims efficiently.
The increased payout to over $9 billion highlights the scale of the legal battle J&J is facing, as well as the company’s determination to bring these cases to a close. However, with some lawyers and plaintiffs still vehemently opposed to the settlement, the legal fight is far from over.
For now, J&J continues to maintain that its talc products are safe, and the ultimate resolution of these cases will likely set an important legal precedent for future mass tort litigations involving consumer products.
