Johnson & Johnson reaches deal to settle talc for $8.9 billion

Johnson & Johnson said on Tuesday it has agreed to pay $8.9 billion to tens of thousands of people who have alleged that the company’s talcum powder products caused cancer, a proposal attorneys for the plaintiffs called a “significant victory” in a legal battle that has dragged on for more than a decade.

The proposed settlement would be Pay over 25 years Through a subsidiary, it filed for bankruptcy to enable an $8.9 billion fund, Johnson & Johnson said in a lawsuit. If approved by the bankruptcy court, the agreement will resolve all current and future claims related to Johnson & Johnson products that contain talc, such as baby powder, the company said.

In a statement, a group of attorneys representing nearly 70,000 plaintiffs, including families of people who have died of ovarian cancer and mesothelioma, called the deal a “milestone” and “an important victory for the tens of thousands of women who suffer from gynecological cancers.” caused by J. & J.’s talc-based products.”

For a deal to become final, the court must first accept a new bankruptcy filing by Johnson & Johnson’s subsidiary, LTL Management, and the settlement itself; The company also needs to convince enough claimants to support the settlement plan. Johnson & Johnson created the LTL in 2021 in a maneuver to protect itself from a talc lawsuit, but an earlier bankruptcy filing by the unit was challenged by plaintiffs and dismissed this year by a US appeals court, which ruled that bankruptcy was not the correct way to resolve the issue. matter.

If approved, the settlement would end a long-running legal drama that has affected Johnson & Johnson’s image. Its baby powder, while not a top seller, is one of the company’s more well-known brands, and several plaintiffs have claimed that the talc used in the product was contaminated with asbestos, a known carcinogen.

Some of the attorneys involved in the cases opposed the settlement, though they acknowledged that court approval would apply to all plaintiffs.

Jason Aitken, whose law firm handles 10,000 cases involving women who alleged that talc powders made by Johnson & Johnson caused ovarian cancer, said the settlement was “bad for the victims” and would be blocked in court. Even if the company succeeds in its filing, Mr. Itkin said it would have to convince enough claimants to vote for the settlement plan.

“Although $8.9 billion sounds like a lot of money, when you hand it out, it doesn’t amount to much at all for the people who have suffered,” he said.

LTL’s first bankruptcy filing had set aside $2 billion to pay damages to plaintiffs. With the new filing, Johnson & Johnson said it would set aside an additional $6.9 billion to cover the payments.

The company said the settlement plan was not an admission of wrongdoing. Eric Haas, the firm’s vice president of global litigation, said in a statement Tuesday that the plaintiffs’ claims are “speculative and lack scientific merit” but would have taken decades and were too expensive to resolve.

“Resolution of this matter through the proposed reorganization plan is both more equitable and more effective, allows claimants to compensate in a more timely manner and enables the Company to remain focused on our commitment to profoundly and positively impacting the health of humanity,” said Mr. Haas. .

Johnson & Johnson executives have known for decades about the risks of asbestos exposure associated with talc products, including the popular baby powder that went on sale 129 years ago. After years of lobbying researchers and scientists, the company has begun to experience a flood of lawsuits in recent years, along with government investigations and inquiries from lawmakers.

The cases resulted in a mixed bag of verdicts and mistrials. Johnson & Johnson said it has won the vast majority of jury trials related to cosmetic talc. It also faced huge losses as it was ordered to pay billions of dollars to a small number of plaintiffs.

In 2020, the company said it would stop selling talc-based baby powder in the United States. It plans to stop selling the product globally this year, and offer a cornstarch version instead.

It also plans to cut its consumer health business, which includes brands like Baby Powder, Neutrogena and Tylenol, to Standalone company, Kinfu. (Johnson & Johnson’s pharmaceutical and medical divisions will remain the same.)

Johnson & Johnson created the LTL as part of a corporate spin that involved splitting liability in a new unit and using the bankruptcy system as a shield against legal exposure. Prosecutors had vigorously opposed the effort, known as the “Texas Two-Step Step” because of its origins in state bankruptcy law, and prevailed in blocking it.

Attorneys for the plaintiffs said the settlement plan on Tuesday “will provide prompt, substantial and fair relief to plaintiffs who cannot wait any longer for a resolution.”

Attorneys said the new bankruptcy approval process will continue in the coming weeks. In court filings Tuesday, LTL said that “bankruptcy is the only forum” where it can permanently close the door on a talc lawsuit, and that it was “crucial” to pause active talc cases to move forward with settlement.