J&J just took a one-two punch in talc litigation. Will they do the right thing?
Last month marked a shift in Johnson & Johnson talcum powder litigation. The corporation took a major blow with the U.S. Supreme Court’s denial of their appeal in a $2.1 billion judgment, and is facing a second hit as they’re once again facing the scrutiny of juries and the public as courtrooms reopen and trials are scheduled to resume.
The question is: Will J&J do the right thing? Will they make a serious effort to accept responsibility for the suffering of tens of thousands of women who trusted their products and ended up with cancer, or will they dodge responsibility by filing a shady Texas two-step bankruptcy?
Here’s the latest.
Punch One: J&J Appeal Denied
In July 2018, a City of St. Louis jury ruled in favor of 22 women, all plaintiffs who suffered ovarian cancer as a result of years of talcum powder use.
The jury listened to weeks of testimony, including the introduction of decades-old internal memos from J&J’s own scientists warning them to remove talc from their popular baby powder. In the end, the jury awarded the women a combined $4.69 billion in damages.
Upon appeal, two of the cases were thrown out because of jurisdiction issues, and the Missouri Court of Appeals reduced the award to a still-impactful $2.1 billion.
J&J continued to appeal the decision in an effort to avoid accountability, and to minimize the implications this judgement would have on more than 20,000 pending cases against them filed by women whose lives they destroyed.
Last week, the highest court in our country, the U.S. Supreme Court, denied J&J’s final attempt at an appeal.
For the 20 women in the original lawsuit, some of whom didn’t live to hear the decision, this week’s denial is a huge victory. It’s also a huge win for those still awaiting justice.
With appeals exhausted and compensation to pay, J&J is under more pressure than ever to settle the remaining cases. Until now, they haven’t come to the table with a desire to adequately compensate the tens of thousands of talc-related ovarian cancer victims they’ve harmed, but we are hopeful that renewed financial pressure will prompt the company to do the right thing and offer a fair settlement.
Punch Two: Court Resuming
Courtrooms are reopening and trials are resuming across the country.
After more than a year of unpredicted Covid-19-related closures, courtrooms across the country are opening their doors and resuming trials.
Johnson & Johnson is scheduled to face plaintiffs in two back-to-back trials in a City of St. Louis courtroom beginning September 7, 2021.
Many settlement offers happen on the steps of courtrooms – crafted under pressure so corporations don’t face big losses and bad publicity as evidence is presented in trial. We believe strongly that our clients have waited long enough for justice, and we believe now should be the time for J&J to accept responsibility and adequately compensate their victims.
Continuing Threat of Texas Two-Step
Back in January, we shared in our newsletter that J&J was threatening to file a shady type of bankruptcy called a Texas two-step. That threat still lingers.
Later this month, a judge is expected to rule as to whether or not such a move constitutes fraud on creditors in two other bankruptcies where similarly solvent and economically viable companies have tried a similar Texas two-step move. The outcome of those cases could affect approximately 20,000 OnderLaw clients who are victims of talc-related cancer.
A Texas two-step bankruptcy is a move that’s in line with the unscrupulous tactics Johnson & Johnson has exercised for decades. If they are successful (and we don’t believe they will be) the company hopes to discharge their liability from talc lawsuits throughout the country.
There are many reasons why we believe that this attempt will not be successful. Still, we want you to be aware of what is going on so that, should you read or see media reports, you’ll understand what J&J is attempting to do. Here’s a rundown:
What is the Texas Two Step?
First, the State of Texas has what is called a divisive merger statute. Essentially it allows a company to divide into two separate entities.
Step 1:
J&J can, in theory, split off some of their assets along with their talc liabilities into a separate inadequately funded entity in Texas.
Step 2:
J&J could attempt to change the domicile of that entity to North Carolina, then file bankruptcy to discharge liabilities.
We believe this is a delay tactic and are hopeful that the judge will see through this effort to avoid accountability, and we will keep you posted! Be sure to follow us on Facebook (OnderLaw ) where we will share the decision as soon as it is announced.
