Talcum Powder Cancer Lawsuits: Appeals Courts Kicks Out J&J's Texas-Two Step Bankruptcy Attempt

Last month, a U.S. appeals court tossed out Johnson & Johnson’s attempt to offload thousands of talcum powder cancer lawsuits into bankruptcy court. The company is named as a defendant in approximately 38,000 personal injury lawsuits. Only a handful of these cases have either gone to trial or resolved in settlements, costing the company more than $4 billion.

Texas Two-Step Bankruptcy

Last year, Reuters reported on a plan that Johnson & Johnson insiders referred to as “Project Plato” in an attempt to eliminate all current pending lawsuits, including a $27 million jury award that would have been nullified by the bankruptcy maneuver. Under this plan, the company would essentially walk away from any liability by creating a new business that would then seek a Texas Two-Step bankruptcy protection.

Texas Two-Step bankruptcy is a controversial legal maneuver where a company creates a new subsidiary and then places all of its tort liabilities (personal injury lawsuits), but a minimum amount of the original company’s assets. The new company then files for Chapter 11 bankruptcy, effectively shielding the original company from all costs associated with the tort actions.

According to the evidence uncovered in the Reuters report, there were more than 30 Johnson & Johnson employees working on the plan who were all required to sign confidentially agreements. In one memo, a company lawyer warned the employees, “Tell no one, not even your spouse.”

In court papers, one of the company’s attorneys wrote that the goal was to halt all litigation and transfer pending lawsuits to the bankruptcy court where victims from those lawsuits would be competing for compensation from a very small amount of money.

Plan Shot Down

The appeals court decision shoots down Johnson & Johnson’s plan, ruling that the company improperly placed its subsidiary into bankruptcy since there was no financial distress. By throwing out the company’s attempt at skirting liability, it revives those 38,000 lawsuits Johnson & Johnson was attempting to nullify.

The court ruled the healthcare conglomerate improperly placed its subsidiary into bankruptcy even though it faced no financial distress. Johnson & Johnson’s two-step sought to halt more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talc products caused cancer. The appeals court ruling revives those lawsuits.

Contact a Virginia Injury Attorney for Help

If you or a loved one was diagnosed with mesothelioma or ovarian cancer after regularly using talcum powder products, call Shapiro, Washburn & Sharp to meet with one of our dedicated and skilled Virginia talcum powder cancer lawsuit attorneys immediately. Our team of experienced personal injury and wrongful death lawyers is investigating and accepting talc powder cancer cases. We may seek to include your case in a talc powder cancer class action, or we could represent you or a loved one individually. Due to the possible statute of limitations placed on filing a talcum powder cancer lawsuit, it is important to contact our office today.